New Zealand Law Society - Remedial tax legislation – a proactive solution put to Inland Revenue

Remedial tax legislation – a proactive solution put to Inland Revenue

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The New Zealand Law Society | Te Kāhui Ture o Aotearoa recently wrote to Inland Revenue to highlight problems, including extensive delays, in progressing remedial tax legislation, and to advocate a low-cost and effective solution – the establishment of a remedials advisory panel to process and prioritise remedials.

The current process for dealing with tax legislation remedials is not subject to formal external scrutiny, is creating delays and backlogs and using valuable Inland Revenue resources, and the Law Society’s Tax Law Committee believes a fresh approach is needed.

“Significant remedials (which are not new policy matters, but are identified deficiencies in enacted legislation) are being delayed, sometimes for many years. This is undermining taxpayers’ (and their advisers’) ability to know with certainty how the law applies to them, and is arguably undermining the public perception of the integrity of the tax system,” committee convenor Neil Russ says.

“A remedials advisory panel (or a functionally similar entity) would provide a means of assisting the Commissioner and taxpayers to deal with remedial issues in a timely, transparent and accountable way, and ensure internal and external review of issues raised in relation to legislation which may not be achieving the intended legislative objective”.

There is precedent for this solution. A rewrite advisory panel, comprising external representatives and officials, was set up in 1995 and its role extended in 2004 to help deal with unintended legislative consequences arising from the tax rewrite process. That panel was disestablished in 2014.

The Law Society has proposed that a new remedials advisory panel would work on a register of remedial issues being considered that would be available to stakeholders and the public. This element of transparency is especially important in circumstances where the normal consultation process is not followed.

Inland Revenue has responded, not taking up the proposal and expressing a preference for improving the current system, which does not include a mechanism for formal input from external stakeholders on remedial tax amendments.

We will continue to engage with Inland Revenue and advocate for due process and quality legislation, in line with the Law Society’s statutory mandate on behalf of the legal profession and in the public interest.

Letter to IRD from the Law Society’s Tax Law Committee

Letter from IRD to Law Society’s Tax Law Committee