New Zealand has released two sets of policy proposals for simplifying tax administration:

1. Making tax simpler – Towards a new Tax Administration Act

2. Making tax simpler – Better administration of PAYE and GST

Tax administration

In an address to the Trans-Tasman Business Circle on 11 November, Minister of Revenue Todd McClay noted that whilst New Zealand has a tax system which is ‘among the best in the world’, there is room for improvement. This would be by way of simplification, more certainty and more transparency for all stakeholders, including individuals, businesses and Government.

It is the Government’s priority to introduce digital channels for taxpayers.

  • Mr McClay noted favourable uptake with 94 per cent of customers receiving refunds digitally, 84 per cent making payments digitally and 60 per cent filing digitally, either via the IRD website or through tax agents.
  • In addition more than two million letters, statements and notices have been communicated by way of taxpayers’ secure myIR accounts. These are taxpayer-initiated portals facilitating communication between Inland Revenue and taxpayers.
  • More than 1.8 million individuals also have voice verification with Inland Revenue.

Streamlining measures have seen enhancements such as registration for PAYE (Pay As You Earn, New Zealand’s system of withholding tax on employment income), at the time of company formation through the Companies Office website (IRD numbers have been obtainable at the time of company formation for some years now), registration for a child’s IRD number at the time of registering the birth, and information sharing between Inland Revenue and the Ministry of Social Development.

Business Transformation Bill

Earlier in 2015, the Government introduced a Business Transformation Bill, consulting with the public on the future of New Zealand’s tax system.

Objectives under this initiative include:

  • allowing electronic signatures on taxpayers’ income tax returns in addition to manually signed returns
  • direct filing of business tax returns through accounting software, initially Xero and MYOB, bypassing the traditional IRD forms
  • GST returns will be initial business returns which will be able to be filed in this manner starting in March 2016, followed by PAYE returns.

The Making Tax Simpler project is currently ahead of its projected ten-year time-frame. It is also currently under budget, with the initial estimate of NZ$1b now reduced to NZ$1b and completion scheduled for seven years –11 November 2015.