Inland Revenue will spend almost $4 million on an advertising campaign to prepare people for big changes to the tax system that will kick in next year.

Spokesman Rowan McArthur said the $3,880,000 campaign would include print, online and radio advertising, and Inland Revenue would be producing graphics and videos.

The tax changes would be the biggest in a generation, IRD commissioner Naomi Ferguson said.

Assuming Parliament passes all the necessary legislation, the April 2019 tax year would see a "fundamental shift in the way New Zealanders interact with the revenue system", she said, with almost every household and business affected.

READ MORE

* Taxpayers to reap 'gain from the pain' at Inland Revenue

* Everyone to get 'pre-populated' annual tax statement

* Inland Revenue to stop accepting post-dated cheques from February

MAARTEN HOLL/STUFF Almost every household and business will be affected by the tax changes.

The changes, which will be brought about by the second stage of IRD's $1.5b to $1.8b Business Transformation programme, will see automated tax assessments issued to about 1.7 million taxpayers, who should get tax refunds paid straight to their bank accounts.

"About 720,000 of those people will not have had any recent contact with IRD, some not for 20-years or more, so it may come as a surprise," Ferguson said.

Of those 720,000, about 530,000 would be beneficiaries and people who earned less than the minimum wage and who had never applied for a tax refund before, she said.

Ferguson said more than 330,000 Working for Families recipients would benefit from new processes, with IRD getting their wage and salary information immediately, allowing it to adjust payments so they were "always getting the right amount".

RODD GIBLIN/STUFF IRD commissioner Naomi Ferguson says there will be a "fundamental shift in the way New Zealanders interact with the revenue system".

Dividend and interest payments will be reported to IRD more frequently by banks and businesses which should also reduce the amount of information taxpayers themselves had to provide.

The personal tax reforms are expected to leave people about $100m a year better off, overall, because of the reduction in unpaid refunds.

Lester Binns, managing director of tax management company My Tax, said in August that the "digital push" made sense, given Inland Revenue was trying to become a lean organisation.

But he forecast there could be a rush of people trying to log on to myIR for the first time next year, which could put a lot of pressure on its contact centres.