Government tax policy work programme 2019-20
As at 8 August 2019 (see the page history for details of changes).
The tax policy work programme covers these workstreams:
- Information collection and use
- Business Transformation
- Reforms and remedials
- Social policy including Government response to the Welfare Overhaul
- Environment/sustainable economy
- Tax exemptions
|Workstream||Description and additional information|
The current land rules will be reviewed, particularly in relation to investment property and speculators, land banking, and vacant land. The objective would be to recommend ways to improve the efficient use of land, and ensure that the current tax settings are fair, balanced, and encourages and supports productive investment. The review will also look at whether we can do anything more around enforcement of the current rules. It is unlikely that any significant reforms relating to vacant land and property would be feasible in the short term. However, in the short-term the Government could consider a number of measures aimed at improving the fairness and balance of the tax rules for land.
Possible items that could be included in a short-term package
Measures to support efficient land use:
Measures to improve the integrity of the rules:
Measures to improve collection:
Possible items that could be considered in a longer-run review
Enhancing economic performance and minimising the tax system’s impact on businesses are priorities for the Government. Reducing compliance costs directly impacts on productivity (particularly of smaller firms) leaving them more time to focus on running their business, as well as continue to innovate and develop new opportunities. Increasing neutrality will also be a focus, ensuring that commercial decisions are not driven by tax whilst protecting the integrity of the tax base.
This workstream will focus on:
This includes working with other Government agencies to ensure that items in this workstream support wider Government work on business.
Examples of items that could be considered for inclusion relating to businesses
TWG recommendations including:
Items already underway such as:
Examples of items that could be considered for inclusion relating to small businesses
TWG recommendations including:
Items already underway such as:
Infrastructure is a key area of interest for the Government. It contributes to economic performance, and the Government is focussed on achieving better outcomes for infrastructure investment in New Zealand. Many of the changes being looked at are outside of the tax system, but the tax system may have to adapt to new arrangements. This project will consider whether the tax system should have a role in driving infrastructure investment.
The infrastructure project will:
|Information collection and use||
The effective use of information by Government is critical to the efficient delivery of Government services. The efficient and effective collection and use of information helps to ensure the tax system minimises compliance and administration costs, while also supporting and contributing to wider Government priorities. Better information also contributes to the integrity and fairness of the tax system and helps to ensure that the tax system can respond well to future challenges.
This package will consider:
|Business Transformation (BT)||
We will continue to support Inland Revenue’s BT programme. Over the next 18 months, Inland Revenue will implement Release 4 of its BT programme (Student Loans and KiwiSaver) and commence design on Release 5 (Child Support).
Further, we envisage the BT policy work stream as identifying and developing policy proposals that leverage off and support the new tax and social policy system. This would include work on:
|Reforms and remedials||
Many of the specific provisions in the Taxation Acts need to be regularly maintained or updated in response to changing technology, business practices, jurisprudence or other factors. In addition, as Inland Revenue and taxpayers begin to apply new tax legislation we may identify legislative errors or unintended consequences which require remedial amendments.
These issues can create high compliance costs or inadvertent non-compliance so need to be addressed promptly to maintain the certainty, efficiency and fairness of the tax system.
Some examples of items include:
|Social policy including Government response to Welfare Overhaul||
This work stream includes policy work on:
The Tax Working Group noted a range of areas where greater environmental taxation could be used to change behaviour and raise revenue. In response, this project will consider the Group’s framework for taxing negative environmental externalities. The Government decided not to advance specific environmental proposals raised by the Group beyond what is already on its work programme. However, this leaves scope for tax reforms for greenhouse gases, solid waste, water pollution, and congestion.
Tax policy officials will work with other agencies on environmental issues to provide environmental tax analysis and advise on tax implications of environmental policy. Key areas are:
This project will include two further areas of work:
Government periodically reviews the charitable sector's use of what would otherwise be tax revenue, to verify that intended social outcomes are being achieved.
This project will include a report to Ministers before the end of 2019 to address recommendations of the TWG. It will take into account DIA’s modernisation review of the Charities Act. On current timeframes, it is anticipated that high level policy decisions arising from DIA’s review will be made by Cabinet before the end of 2019, with detailed policy decisions to follow in the first half of 2020. The specific tax policy issues are:
A second report to Ministers will outline other sector tax matters that could potentially be subject to policy change and sector consultation. For example:
Inland Revenue has consulted with DIA on these proposals and will be working with DIA on any policy or regulatory impacts associated with these initiatives. This work is on-going.NFP/charity concessions interact with both local government settings and the Māori sector.
The income tax legislation contains various exemptions from income tax, including income earned by charities and businesses run for charitable purposes, Local Authorities, Government entities often as public authorities, and Crown-controlled companies (in certain circumstances). In contrast state enterprises are subject to income tax and local council-controlled companies are also taxable. The overall treatment of these different entities is not completely consistent. There are an increasing number of requests for income tax exemptions, and a need to adopt a coherent framework to consider these requests.
The review will consider entity tax exemptions with a view to providing more consistency. It will consider:
There has been recent and growing concern from Governments and the public about the low levels of income tax paid by digital companies (that is, companies operating through highly digitalised business models). Pressure has been building on the long-standing international income tax framework; and the OECD (including New Zealand) have undertaken to review the framework.
This workstream will include:
Previous work programmes:
- Last updated: 8 August 2019
- Changes made:
- 8 August 2019 - Update work programme and engagement framework published
- 17 May 2018 - New work programme published
- 20 June 2018 - Modified title for Business Transformation