2015 5 making tax simpler - tax administration

© Baucher Consulting Limited May 2015 All rights reserved.
Making Tax Simpler
A Government green paper on
tax administration
Terry Baucher, Baucher Consulting Ltd

Tax Administration
1.First of series of discussion documents to be
released between now and 2017
2.Two chapters and seven appendices
3.Chapter 1: Why focus on tax administration
4.Chapter 2: Key elements of potential
changes
5.Questions for feedback
6.Closing date for submissions 29th
May

IRD’s roadmap of the way forward
Enable
secure
digital
services
Complete
the future
revenue
system
Streamline
social
policy
Streamline
tax

What the tax system does

Goals of the tax system

Composition of tax revenue
year ended 30th
June 2014

Benefits of a future tax system

Chapter 1 questions (1)
1. Would the potential changes discussed in this
Green paper be broad enough to deliver significant
improvements to New Zealand’s tax administration
systems?
2. Are the potential changes heading in the right
direction, and have we focused on the right issues?
3. Are there any errors or key omissions? If so, what are
they?

Chapter 1 questions (2)
4. Is the proposed sequencing and order of the work
sensible?
5. Does the current sequencing and order of work
ensure the compliance costs associated with
implementing change are minimised for business
and other customers?

Key elements of potential changes

Potential changes to PAYE - Issues
 Should the current EMS form be replaced with
automatic digital data transfers?
 How should Inland Revenue ideally obtain additional
relevant information?
 When will the information be considered accurate?
 Should some employee information be private and not
shared with an employer (for example, should child
support information be treated differently as it is a
matter between the employee and Inland Revenue)?
 Should the timing of PAYE information and payment of
PAYE align to when salaries and wages are paid to
employees?

Potential changes to PAYE
Questions (1)
1. Government’s view is that more effective use of a
business’s own systems to provide PAYE, GST and
related information to Inland Revenue would
provide real benefits to employers – do you agree?
2. If not, what would be a better focus for future
consideration in relation to PAYE processes?
3. Have we considered all likely issues in relation to
streamlining the collection of PAYE and related
information?

Potential changes to PAYE
Questions (2)
4. Are we considering all the relevant issues with the
application of the current PAYE rules?
5. Are there any other considerations facing
employers that would improve how the PAYE rules
work?

Other withholding taxes
Currently only applies to contractors within a listed set
of industries. Could withholding at source be “used in
a wider set of situations, including independent
contractors and possibly for particular industries?”
Question
6.What factors should Government be particularly
conscious of when considering changes to the
withholding tax regime in order to cover more
employment-like situations?

Provisional tax issues

Business tax questions
7. What are the key tax administration issues currently
facing businesses? Are there any particular areas that
present concrete ways of increasing speed and
certainty?
8. How important is improving the provisional tax rules in
reducing compliance costs for business? Are there
other more important issues the Government should be
focusing on instead, or as well?
9. The Government seeks feedback on more effective
and simple methods of calculating and paying
provisional tax and, in particular, how provisional tax
could be better aligned to other business processes.

Small businesses - issues
 Wish is to make it easier for small businesses to comply
 Could IRD specifically help by encouraging the use of
improved business systems and accounting software
that meets specific standards or provide support at key
times eg taking on staff
 Moves could be supported by changes to shortfall
penalties regime to recognise where taxpayer
attempting to comply
 Maybe some specific measures aimed at reducing
compliance cost

Small businesses - questions
10. Is the proposed direction the correct focus to
provide benefits for small businesses or are there
other more important ways of helping small
businesses?
11. Are there any areas where you think tax for small
businesses can be simplified, without creating
specific tax breaks?
12. A particular focus is to ensure that small businesses
achieve higher levels of compliance – what are
the most important practical ways of promoting
and achieving higher levels of compliance?

Information Provision
Government wants to move away from “one size fits
all” approach and place more focus on providing key
information in digital form in a way that suits the size
and nature of the businesses.
13.What are the key considerations that should be
taken into account when looking at the provision of
business income information?

Resident withholding taxes
Review of current RWT rules proposed which would
consider the type and timeliness of information
provided, compliance costs and whether RWT systems
could be used to collect underpayments
14.Is there anything else a review of the RWT rules
should consider?

Conceptual view of individual’s income
tax in the future

Future tax for individuals
“Significant numbers of individuals are now either
required to file returns or are choosing to do so. It is
therefore timely to consider whether it is still desirable
to keep as many individuals as possible from actively
interacting with the tax system”
15.Do you agree with the idea of interacting with the
tax system by online tax statements
16.If not, why not?
17.Is there anything else we should consider?

Social Policy
Review present annual
cycle & how to make better
use of information from
other sources.
18.Do you agree with the
proposed direction of re-
designing processes for
administering social policies
in the future?

Policy & Legislative Framework
Proposes a review of the overall framework including
the role of Parliament, Inland Revenue, taxpayers and
third parties and of the Tax Administration Act 1994
19.Do you agree that the correct areas are being
looked at in reviewing the policy and legislative
framework for tax administration?

2015 5 making tax simpler - tax administration

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