Providing data to Inland Revenue – the Statement of Activity

(Clause 45)

Summary of proposed amendments

The bill proposes that AIM taxpayers provide Inland Revenue with an agreed set of information on or before each instalment date (the Statement of Activity), and that AIM providers provide Inland Revenue with an agreed set of aggregated data within six months of the end of the tax year. This information will not include taxpayer-specific information.

Application date

The proposed amendments will apply for the 2018–19 and later income years.

Key features

Proposed new section 45 of the Tax Administration Act 1994 will require taxpayers using the AIM approach to provide information to the Commissioner on or before each AIM instalment date.

Section 45B requires approved AIM providers to also provide information to Inland Revenue when and if requested in relation to their AIM capable software system products. This does not include any taxpayer-specific information.

Detailed analysis

It is proposed data be provided to Inland Revenue in two types: from the AIM taxpayer and the AIM providers.

Taxpayer-specific information

Proposed section 45 sets out the information it is proposed Inland Revenue receives on each instalment date from the taxpayer. An AIM-capable accounting system will have the ability to map the ledger accounts of the company into an agreed Statement of Activity form.

Some accounting software already maps business accounts into the current IR10 Summary of Financial Statements so this process is familiar to AIM providers. The Statement of Activity would be automatically mapped into an agreed form and be submitted to Inland Revenue by the software itself. Inland Revenue would not have access to the software system at all and would only receive the agreed aggregated data sent by the system.

The Statement of Activity is important as it demonstrates the robustness of the accounting system behind the amount paid as provisional tax. If this is not provided, Inland Revenue would have no evidence that a comprehensive accounting system is being used by the business to calculate its accounting income results.

The Statement of Activity data is a summary of what is in the accounting software at that date. It is not intended to be seen as a mini tax return; rather it is a simple snapshot of the data held within the accounting software at the time the payment was calculated. It would not need to be re-filed should an error be retrospectively discovered.

What information is proposed to be sent to Inland Revenue will be confirmed by the working group made up of representatives from public and private (accounting and software) sectors.

The information received will enable the Commissioner to discharge her duties through reviewing the information for key ratio data, industry outliers, targeted services, further policy design, statistical purposes and determining audit selection criteria. Regular provision of this information to Inland Revenue on a cumulative basis throughout the year is intended to simplify year-end processes.

Aggregated provider information

Proposed section 45B provides that approved AIM providers must also provide information to Inland Revenue when and if requested in relation to their AIM-capable software products. This does not include any taxpayer-specific information. It is only for aggregated statistical data to assist Inland Revenue with further policy development and improvement of the AIM approach itself.

It is likely this would include information on the use of the software itself, the timing of interactions in the software and any “pain” points the software is encountering to assist with further policy development and improvements in accuracy.