About 5,300 tax agents are registered with Inland Revenue and they manage the tax affairs of nearly two million clients. Tax agents range from individual bookkeepers working from home, to large businesses that offer consulting and accounting services. The advice and assistance tax agents give their clients contributes significantly to the smooth running of the tax system. Modernising the tax system will require change over a number of years, and the Government believes that tax agents have a key role in enabling their clients to benefit from the new features of the tax administration.
Some of the proposed Making Tax Simpler changes would allow tax agents to spend less time on routine processes and more time on other services. For example, it could mean focusing on ensuring that businesses are inputting the correct information and that their systems are appropriate, and that clients are educated on how to navigate new processes. On the other hand the need to carefully review information and make sure it is accurate will become even more critical as information collection is streamlined.
Therefore, while features of the modernised tax administration suggest the nature of the support agents provide may change, the Government expects that tax agents will continue to have a key role in shaping compliance outcomes.
Maintaining a tax agent list
Inland Revenue maintains a list of approved tax agents. The list allows Inland Revenue to have oversight over the tax agent population and is currently used to differentiate between tax agents eligible for the extension of time and those who are not. The listing also provides Inland Revenue with an additional tool to protect the integrity of the tax system by delisting or refusing to list an agent where the listing would adversely affect the integrity of the tax system.Â Â In practice, this rarely occurs and the number of declined applications is low.
Consideration has been given to whether more regulated tax agent rules such as Australiaâ€™s would be beneficial to New Zealand. On balance, it appears that any tax integrity benefit would be outweighed by higher compliance and administrative costs and so no proposals along these lines have been put forward.
Providing specialised services to tax agents
In recognition of the role that tax agents have in helping their clients meet tax obligations or advising on how tax law applies, Inland Revenue currently provide a suite of support and special services. These services range from having an agent account manager who serves as the primary contact with Inland Revenue, to dedicated phone services and access to client information held in MyIR. In addition, eligible tax agents are provided with an extension of time for filing client returns which assists agents who file large numbers of returns to better manage their clientsâ€™ affairs.
Modernising the tax system provides Inland Revenue with the opportunity to allow other tax service providers to access the broader range of services currently only available to those that meet the definition of a tax agent.