wiki

Te wiki o te tāke; Does the IRD’s power creep amount to overreach? – Interest.co.nz

Summary

The Week In Tax · Improving the quality of tax legislation, concerns about increased powers of tax authorities & more

Earlier last week, more detail emerged about a report that had been commissioned by Inland Revenue into its legislative drafting process. Apparently, there is a full report which was released to Inland Revenue in June but has not been made public. Instead, a summary of the conclusions has been made public recently, and it’s the subject of some news reports.

The…….

npressfetimg-12652.png

The Week In Tax · Improving the quality of tax legislation, concerns about increased powers of tax authorities & more


Earlier last week, more detail emerged about a report that had been commissioned by Inland Revenue into its legislative drafting process. Apparently, there is a full report which was released to Inland Revenue in June but has not been made public. Instead, a summary of the conclusions has been made public recently, and it’s the subject of some news reports.

The news reports sound much worse than the position actually is, but it is interesting to lift the hood, so to speak, and have a look at the very important process of turning policy intentions into legislation and how that works.

What Inland Revenue wanted to do was undertake a review of how it was doing on this basis, because one of the interesting things about Inland Revenue is that it gets to draft its own legislation. Normally, legislation is prepared by the Parliamentary Counsel Office, but with tax legislation Inland Revenue does the drafting, making it the only government department with that power. Inland Revenue is quite unusual because of how extensive its powers are, and obviously these are required, being the Government’s main revenue gathering agency. Even so, it has powers that tax authorities in other jurisdictions may not necessarily have.

So this report was commissioned two years ago to look into this particular power. Looking beyond the somewhat dramatic news reports about “scathing commentary” there are definitely some concerns to be addressed. One of which I would say would be perhaps a matter of resourcing. Apparently, according to this report, it appears there is one person called Sharon, who is responsible for administering a plain English review of the legislation before it is published.

The report, prepared by Graeme Smaill of Greenwood Roche Lawyers, summarises the three broad areas that it believes should be the focus of future efforts to improve Inland Revenue’s legislative process. Firstly, the use of existing and identification of further specific drafting tools to deliver legislation that is fit for purpose and accessible for those who need to use it.

Now, one of the things to keep in mind about legislation and how it’s drafted is that by and large, the legislation is drafted for general use. New Zealand, as part of its tax simplification policy adopted in the 80s, tries to avoid special regimes where possible.

But what this does mean is that sometimes it’s drafting legislation, such as the hybrid mismatch rules, which will affect a very small group of taxpayers, mainly large multinationals. But they apply across the board, which means coming back to the theme of last week’s podcast. Unintended consequences may mean a small business in New Zealand exporting to Australia or setting up operations to export in Australia might find itself caught up in these …….

Source: https://www.interest.co.nz/personal-finance/113314/te-wiki-o-te-t%C4%81ke-it-time-send-inland-revenue-back-school-warning-uk-about