Where customers could move to digital services but have chosen not to, the Commissioner of Inland Revenue would need to work alongside these customers to support and encourage them to adopt digital services. The Commissioner also has the ability to determine the range of services which are offered, under her powers to administer the tax system.
Those powers are set out in section 6A of the Tax Administration Act 1994, and give the Commissioner the duty to collect the highest net revenue over time, having regard to:
- the resources available to the Commissioner;
- the importance of promoting compliance; and
- the compliance costs incurred by taxpayers.
Imposition of additional and avoidable costs on tax administration system
Section 6A requires the Commissioner to compare the additional costs these customers would impose on the tax system by not using digital services with the costs these customers would face in moving to digital services, and using those digital services on an ongoing basis. The Commissioner could make the decision under this provision to remove non-digital services for some customers for some transactions.
As well as the additional and avoidable costs imposed on the tax system, the reluctance of these customers to use digital channels may also be imposing additional and avoidable costs on other agencies which rely on information provided by Inland Revenue. The Commissioner may also wish to take these costs into account in her approach to the use of digital channels by these customers.
Where others are denied the benefits of the new tax administration system
The Commissioner of Inland Revenue would need to work alongside those who provide information about the tax position of others, and who are being denied the benefit of the new tax administration system, to support and encourage them to adopt digital services. Again, the Commissioner’s powers under the Tax Administration Act would allow her to restrict the availability of non-digital channels for some transactions carried out by those who provide information if this was appropriate, although this would need to be evaluated against compliance costs for those affected.
The Government sees the satisfactory resolution of this issue as critical to ensuring that the New Zealand economy as a whole derives maximum benefit from the Government’s investment in the new tax administration system, and the delivery of this benefit to some sectors of the economy should not be prevented by the reluctance of others to adopt digital services.
Accordingly, the Government proposes to make it clear that any decision by the Commissioner to require these customers to use digital channels has the full force of law.