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New Zealand To Amend Tax Acts

by Mary Swire,, Hong Kong

07 December 2010

The New Zealand Government has drafted a Bill that amends several pieces of tax legislation affecting secrecy provisions, gift tax, and other administrative measures.

The Bill amends the Income Tax Act 2007 and the Tax Administration Act 1994, the Income Tax Act 2004, the New Zealand Superannuation and Retirement Income Act 2006, the Taxation Review Authorities Act 1994, the Income Tax Act 1994, the Taxation Review Authorities Regulations 1998, the Good and Services Tax Act 1985 and the Estate and Gift Duties Act 1968 (to abolish gift duty).

The Bill amends the Tax Administration Act 1994 to considerably change the secrecy provisions pertaining to Inland Revenue officers and enables the Commissioner to disclose information in the course of furtherance of good tax administration practice. Some information may be disclosed, in circumscribed cases, if it is in the interests of government efficiency. The Bill also provides for other matters, including the abolition of gift duty, improvements to the tax disputes process, and improvements to tax pooling legislation. A number of minor issues are remedied as well.

Most of the provisions of this Bill improve the administration of the revenue-gathering system. Gift duty will be abolished by amending the definition of “gift” so that the term refers only to dispositions of property before October 1, 2011. However provision is made to ensure that gift duty is payable only for gifts made from the Act’s commencement until October 1, 2011.

Secrecy rules will be relaxed. The present secrecy rule for officers of the Inland Revenue department is set out in Section 81 of the Tax Administration Act 1994 and broadly provides that every officer of the Department must maintain and aid in maintaining the secrecy of all matters relating to the Inland Revenue Acts, ACC Acts and the New Zealand Superannuation Act 1974, which come to the officer's knowledge, and must not, either while the officer is or after the officer ceases to be an officer of the Department, communicate any such matters to any person except for the purpose of carrying into effect those Acts or any other enactment imposing taxes or duties payable to the Crown, or of carrying into effect the powers, duties, and functions of the Commissioner under the New Zealand Superannuation Act 1974.

The Bill replaces this rule with the discretion to release taxpayer information in executing or performing (or supporting executing or performing) the powers, duties and responsibilities of the Commissioner to administer, implement, improve, research and reform the tax system.

In deciding whether to exercise the discretion to release, the Bill provides that the Commissioner must consider the integrity of the tax system, the importance of promoting voluntary compliance, the resources available to him or her, the personal or commercial interest or sensitivity of the taxpayer concerned, and whether the information is currently in the public domain. Following consideration of these factors, the Commissioner may release information if the communication is considered reasonable, whether or not it is also necessary. The current test for disclosure which is “reasonably necessary” is relaxed by the amendments.

The Bill considerably expands the capacity of the Inland Revenue Department to share information about taxpayers with other government agencies. The Bill provides for the making of an Order in Council (by the Governor-General on the recommendation of the Minister of Revenue) authorizing the sharing of specified (as to nature, type or class) Inland Revenue information with another government agency, under specified conditions: if it is reasonable and practicable for the Commissioner of Inland revenue to retrieve the information, and if the government agency is lawfully able to collect the information, but the provision, collection, and verification of the information to or by the government agency is uneconomic.

TAGS: compliance | tax | law | legislation | gift tax | New Zealand

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