New Bill Offers Some Relief For Delinquent Taxpayers In New Zealand

by Caroline Maxwell, Tax-News.com, London

06 December 2001

Under new legislation currently before Parliament in New Zealand, life may be about to become just a little easier for those citizens who fall behind with their tax payments.

The bill is designed to encourage delinquent taxpayers to contact the Inland Revenue and arrange a settlement as soon as possible, something which many have been afraid to do in the past due to fears of bankruptcy and poverty as a result of Revenue action.

The provisions of the new law state that although the IRD will still be required to maximise the recovery of outstanding tax, it will not be permitted to do so in a way that causes 'serious hardship' to the defaulter- for example, if more of the debt can ultimately be collected via an installment plan than through initiating bankruptcy procedures, then the tax authorities would be obliged to pursue the former.

An additional provision in the law states that if the administrative costs exceed the amount likely to be recovered, the Inland Revenue Department must drop the debt.

In order to offer futher encouragement to defaulting taxpayers to come forward as soon as possible, the New Zealand Inland Revenue also announced that under the new law late penalties would cease accumulating the moment that a delinquent taxpayer approached them for financial relief, and that if relief was granted, late penalties would be written off provided the taxpayer kept his end of the settlement agreement.

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