Information sharing with the Registrar of Companies
(Clauses 103 and 104)
Summary of proposed amendment
Amendments to the tax secrecy rules are proposed to enable Inland Revenue to share information with the Registrar of Companies, for the purpose of enforcing certain serious offences against the Companies Act 1993.
The amendments will apply from 1 April 2017.
The amendments will allow Inland Revenue to share information with the Registrar of Companies in relation to several serious offences against the Companies Act, including:
- a serious breach of a director’s duty to act in good faith and in the best interests of company (section 183A(1));
- false statements (section 377);
- breaches of various orders and prohibitions from directing, promoting and/or managing companies (section 382(4), section 383(6), section 385(9), and section 385AA(9));
- breach of restrictions on involvement with phoenix companies (section 386A(2).
These offences are punishable by a term of imprisonment of up to five years, or a fine of up to $200,000. These particular offences were considered to be the most appropriate (in terms of both seriousness and potential benefits of obtaining Inland Revenue information) by the Ministry of Business, Innovation and Employment, the Companies Office and Inland Revenue.
The amendments will provide the Commissioner of Inland Revenue with the discretion to share information relating to these offences when:
- either agency reasonably suspects the offence has been, is being, or will be committed; and
- the Commissioner considers the information is relevant to the prevention, detection, investigation or prosecution of the offence; and
- the Commissioner is satisfied the information is readily available, is reasonable and practicable to communicate, and that communication is in the public interest.
The Companies Office oversees important regulatory requirements which ensure business accountability and responsibility. It aims to promote confidence in the New Zealand business environment and hold to account those who abuse the privileges of the corporate structure. The Registrar of Companies is responsible for administering the Companies Act, and has the power to collect information to verify compliance and detect breaches of the Act.
In the course of its regular activities Inland Revenue will, on occasion, hold information that would assist in the detection and enforcement of serious offences against the Companies Act.
Tax secrecy obligations contained in the Tax Administration Act 1994 are broad, covering all matters relating to legislation administered by Inland Revenue. Communication of these matters is not normally permitted other than for the purpose of carrying into effect that legislation. While a number of exceptions have developed for cross-agency information sharing to support wider government objectives, there are no exceptions that would allow Inland Revenue to share the information described above with the Registrar of Companies.
Information sharing under the new amendments will allow more efficient enforcement of the Companies Act, and help prevent harm to the business community and wider public that stems from seriously non-compliant directors and other persons breaching their corporate responsibilities.