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 Administration1.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

Enablesecuredigital

services

Completethe futurerevenuesystem

Streamlinesocialpolicy

Streamlinetax


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 PAYEQuestions (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 PAYEQuestions (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?

Law

2015 5 making tax simpler - tax administration