At a glance
The Government intends to modernise New Zealand’s tax administration. The world is changing, with huge improvements in ways of doing business. What was acceptable 10 or 20 years ago no longer meets the demands of customers today.
Inland Revenue not only collects revenue but also administers a number of social policy programmes.
The tax system is important for New Zealand. It helps fund a wide range of government functions such as healthcare, welfare, education, infrastructure, police, border control, emergency response, and many other services.
To protect the Government’s ability to keep providing these services, it is important that our tax system keeps pace with change. The tax system should be simple and make it easy for people to get right, but difficult to get wrong. It should be fair and support high levels of overall compliance. Improvements should ensure that businesses spend less time on tax and more time on running their business, supporting Government’s wider goal to build a more competitive and productive economy. Costs to customers of complying and to the Government of administering the tax system, should be kept to a minimum.
This document aims to introduce you to the broad direction the Government intends to take to improve the administration of the tax system. Your views on that direction are important. The ideas in this Green paper are in the early stages of development and will be subject to more detailed consultation in the coming years.
WHAT CUSTOMERS THINK
In June 2014, in conjunction with the Treasury and Victoria University, Inland Revenue hosted a conference entitled, Tax Administration for the 21st century.
The conference’s purpose was to explore options for making tax easier (by reducing both compliance and administration costs) and increasing voluntary compliance balanced against core tax policy objectives such as raising revenue, and ensuring fairness and efficiency.
The main points made by attendees at the conference were:
- giving people the ability to self-manage their tax affairs with more speed and predictability but with access to the right staff at the right time with the necessary skills to provide certainty to taxpayers. In other words, Inland Revenue should use new technology to allow more focus on high-value services to taxpayers, to help them manage their tax affairs;
- the need to consider policy and legislative settings (and not merely current business processes) to rethink how tax administration can be improved. It is more than just digitising existing processes and replacing an aging information technology system. Anything within the tax administration system should be up for consideration;
- the importance of involving businesses, other customers, third parties and advisors in the design of the rules and processes that underpin tax administration. The tax administration system has to work for all New Zealanders;
- the cost of change needs to be closely considered and managed to ensure that it is not merely shifting costs from Inland Revenue to businesses and other customers or vice versa. There has to be an overall net benefit to society through a real reduction of compliance and administrative costs; and
- ensuring that there is continued maintenance of the tax system while modernising tax administration;
RESPONSE TO FEEDBACK
After reviewing feedback, the Government is proposing to modernise the way Inland Revenue administers the tax system over a period of years, with particular focus on making better use of digital services for transactions with Inland Revenue. Over the coming years the main emphasis will likely be on the improvements set out on the next page.
IMPROVING TAX ADMINISTRATION FOR:
Employers and businesses by
What it could mean for employers and businesses
Find out more on pages 21 to 29
What it could mean for individuals
Find out more on page 32
Social policy customers by
What it could mean for you
Find out more on page 34
HOW TO USE THIS DOCUMENT
The Government invites submissions on whether the potential changes indicated would likely achieve the intended outcomes for customers. This section provided a very brief overview of the issues and the policy ideas. Your views are welcome on any aspect of these potential changes.
- make a submission based on what has been covered in this section; or
- go directly to the section of this document that interests you to read further detail then make your submission; or
- read the entire document and then make a submission.
HOW TO MAKE A SUBMISSION
You can make a submission:
- Online at: makingtaxsimpler.ird.govt.nz
- By email to: [email protected], please put “Making Tax Simpler” in the subject line.
- By post, with submissions addressed to:
Making Tax Simpler
C/- Deputy Commissioner,
Policy and Strategy
Inland Revenue Department
PO Box 2198
The closing date for submissions is 29 May 2015.
Submissions may be the subject of a request under the Official Information Act 1982, which may result in their release. The withholding of particular submissions, or parts thereof, on the grounds of privacy, or commercial sensitivity, or for any other reason, will be determined in accordance with that Act. Those making a submission who consider that there is any part of it that should properly be withheld under the Act should clearly indicate this.
WHAT THE POTENTIAL CHANGES COULD MEAN FOR YOU
|BUSINESS||INDIVIDUALS||SOCIAL POLICY CUSTOMERS
e.g. Child Support and Working for Families
|Simpler PAYE and provisional tax||Pre-populated returns
Automatic withholding to repay tax debts
Payments calculated in real-time
|Lower compliance costs
Tax processes integrated
into business processes
|Quick and easy tax processes
Less tax debt
|Less need to provide information
Right amount paid at right time – less debt & credit
APPENDIX 2, 3
APPENDIX 4, 5