Compliant taxpayers pay the correct amount of tax and receive the entitlements they should at the correct time.Â It is important to have disincentives to not comply with tax obligations.Â However, the severity of the disincentives should match the severity of the non-compliance.
Modernising the tax system provides an opportunity to recognise that taxpayer behaviour is about more than attitude. A combination of capability, opportunity and motivation lead to compliant behaviour.
To encourage compliance Inland Revenue has started to think more widely about taxpayer needs and behaviours, and has refocused compliance efforts to build an environment that supports taxpayers right from the start.
This new approach to compliance could mean a different approach to penalties. Further analysis on the approach to penalties will form part of future consultations once key features of the modernised tax administration have been further developed.