The New Zealand government released a discussion document
late last year, outlining proposals to simplify and modernise
the Tax Administration Act. The proposals are one aspect of
Inland Revenue's broader business transformation project.
The discussion document, entitled "Making Tax Simpler
– Proposals for modernising the Tax Administration
Act", proposes legislative changes to:
- Better assist taxpayers to "get it right
from the start";
- Extend Inland Revenue's care and
management powers under the Tax Administration Act so that
Inland Revenue has a broader and clearer discretion to
determine how the law applies to particular situations where
there are gaps or anomalies in the way the legislation is
drafted or would otherwise apply;
- Increase access to information and
cross-government information-sharing; and
- Adopt a new "taxpayer confidentiality"
rule to replace the "tax secrecy" concept.
The discussion document 'firms up' the proposals included in
an earlier discussion document (released in November 2015) and
addresses the submissions received in response to that earlier
document (see earlier article entitled "New Zealand continues
tax administration reform", International Tax Review,
March 9 2016).
It is proposed that a new Tax Administration Act will be
enacted, following completion of Inland Revenue's ongoing
"Business Transformation" programme in 2019–21. Until
such time, proposals included in the latest discussion document
will, to the extent they proceed, be incorporated into the
existing legislation in progressive amendments.
Getting it right from the start
The government proposes various changes to support taxpayers
in "getting it right from the start".
The specific proposals include a possible reduction in fees
(at least for small and medium sized businesses) for binding
ruling applications, the ability for a taxpayer to seek a
binding ruling after having taken a tax position in a tax
return, and expanding the criteria for using a streamlined
process for correcting minor errors in tax returns.
Extending Inland Revenue's care and management powers
Inland Revenue's care and management powers will be extended
by providing a statutory discretion to remedy legislative
anomalies in specified circumstances.
Taxpayers could choose whether or not to apply any
determination or decision Inland Revenue makes pursuant to this
extended care and management power. This is an important
practical safeguard for taxpayers, and is appropriate given the
constitutional principle that tax should be imposed only by or
under Parliamentary authority and not by the discretion of
Increased access to information and cross-government
The discussion document proposes a new provision to empower
the making of regulations governing the repeat collection of
external data sets (for example credit and debit card
transaction data collected from financial institutions and
records of online sales activities). The government notes it
will follow the Australian and UK examples in its approach to
the transparency reporting of external dataset collection so
that the public is aware of circumstances in which certain data
is routinely provided to Inland Revenue.
Further, a new legislative framework will be introduced to
allow more flexible information sharing between government
agencies via regulations. It is proposed that principles
governing when information-sharing is appropriate will be
enacted alongside the power to make regulations for
A new taxpayer confidentiality rule
The proposed taxpayer confidentiality rule narrows the
coverage of the tax secrecy concept, which prohibits the
disclosure of any and all information relating to the
administration of the tax system.
Taxpayer confidentiality as a general rule would (subject to
certain exceptions) protect information that identifies or
could identify a taxpayer. The discussion document notes that
this is similar to the approach taken in other countries such
as Australia and Canada. A further proposed amendment would
permit Inland Revenue to refuse requests for official
information if necessary to protect the public revenue.
The government has sought submissions on the proposals by
February 24. It is unlikely that the proposed changes will be
enacted until 2018.
Chris Harker (firstname.lastname@example.org)
and Jessica Riley (email@example.com)
Tel: +64 4 819 7345 and +64 9 367 8183