Retention of adjusted net income records

Clause 70)

Summary of proposed amendment

The proposed amendments will make student loan borrowers who have adjusted net income subject to the record-retention requirements of the Tax Administration Act 1994 and explicitly subject to the obligations set out in that Act relating to retention and disclosure of information.

Application date

The amendments will come into force on the date of enactment.

Key features

Section 15B of the Tax Administration Act sets out a taxpayer’s obligations. To ensure that there is no doubt that student loan borrowers are subject to these obligations, where appropriate, section 15B is being added to the list in section 202 of the Student Loan Scheme Act 2011 of provisions of the Tax Administration Act and Income Tax Act 2007 that apply to the Student Loan Scheme Act.

Section 22 of the Tax Administration Act requires taxpayers to keep business and other records. Student loan borrowers with adjusted net income will become subject to these requirements through the addition of proposed paragraphs 22(2)(fc) and 22(2)(n).

Background

Borrowers with income for which they are required to file annual tax returns are automatically subject to the requirements for retention of records in the Tax Administration Act 1994. However, with the introduction of the adjusted net income provisions in 2013, borrowers should also have been required to retain records of the adjustments to their net income. This is necessary to allow Inland Revenue to review source records to ensure the correctness of assessments, either as a result of borrowers exercising their dispute or challenge rights, or through its own audit activities.