Fairer tax treatment proposed by discussion document 1/4Paul Swain Associate Minister of Revenue
Fairer tax treatment proposed by discussion document
People who get into difficulty with their taxes are likely to benefit from
proposals in a Government discussion document released today.
Associate Revenue Minister Paul Swain and Under-Secretary to the Revenue
Minister John Wright released the document - the third in a series of four tax
simplification discussion documents. They say the tax rules should reflect
"Rules that are too harsh will not be perceived as fair, nor will rules that
are too lenient," Paul Swain said.
"The proposals in this discussion document attempt to strike a balance
between the two extremes, to encourage voluntary compliance with the tax laws in
the best possible way.
"We want to replace the current tax rules that provide relief to taxpayers in
debt who face hardship," Paul Swain said.
John Wright said the government intends reducing the penalty for lack of
reasonable care for first-time offenders, and generally make things a bit easier
for those who do get into trouble.
"The new rules will give Inland Revenue greater flexibility in dealing with
taxpayers' debt problems, and will encourage taxpayers to contact the department
about their debt problems as early as possible," he said.
"For example, if a taxpayer enters an instalment arrangement for paying off
tax debt, late payment penalties will stop as soon as the taxpayer contacts
"The discussion document also deals with problems raised by Parliament's
Finance and Expenditure Committee in its 1999 inquiry into the powers and
operations of the Inland Revenue Department.
"We have already acted upon several of the changes recommended by the
committee, including reducing late payment penalties. This discussion document
makes a number of proposals to complement that work, such as ensuring that
taxpayers are given more information in their dealings with Inland Revenue,"
John Wright said.
Associate Revenue Minister Paul Swain said another main proposal in the
discussion document is to impose a penalty on promoters of tax avoidance
"The rationale is that promoters of these schemes should be clearly
accountable for their actions," he said.
"Other proposals would strengthen Inland Revenue's information-gathering
powers and generally clarify the law for people who overpay their tax and want
to transfer the excess.
"The issue of who is liable when an agent doesn't take care is also discussed
and options considered in the document.
"This discussion document is part of the consultation process in the
continuing review of the compliance and penalty legislation in the Tax
Administration Act. The point of the review is to determine if the relatively
new legislation, enacted in 1996, is working as intended, and where it could be
improved," Paul Swain said.
The closing date for submissions on the proposals on debt, hardship and
transfers of excess tax is 21 September. Legislation arising from these
proposals will be included in a taxation bill to be introduced later this year.
The closing date for submissions on the other proposals is 21 November.
The discussion document, Taxpayer compliance, standards and penalties: a
review, is available at Bennett's Government Bookshops and on the web sites of
the Policy Advice Division of Inland Revenue at www.taxpolicy.ird.govt.nz and the
Treasury at www.treasury.govt.nz.