Serious hardship

Clauses 128(4) and 153 to 157

Issue: Support for the proposal

Submission

(New Zealand Institute of Chartered Accountants)

The submitter accepts that, on occasion, the Commissioner may need to bankrupt a taxpayer who is in serious hardship, and considers that the Commissioner should not have regard to the reasons why a taxpayer is in serious hardship when the taxpayer applies for financial relief.

Comment

The proposals in the bill are being made to allow the Commissioner, in appropriate circumstances, to bankrupt taxpayers who are in serious hardship, and to ensure that the reasons why the debt arose are not a factor in determining whether the taxpayer is in serious hardship.

The submission supports the proposals in the bill.

Recommendation

That the submission be noted.

Issue: Relevant factors in determining “serious hardship”

Submission

(New Zealand Institute of Chartered Accountants)

The inclusion of proposed section 177A(2)(c) should be reconsidered as it could lead to questions about the factors that the Commissioner considered are “relevant” factors.

Comment

The bill proposes a new definition of “serious hardship”. The current definition uses the word “includes” and lists factors that may give rise to the taxpayer being in significant financial difficulties. The proposed definition does not use the word “includes, but rather states that the Commissioner can make a decision and consider “other factors that the Commissioner thinks relevant would likely arise”. The current definition and the proposed definition are not definitive lists of circumstances but allow the Commissioner to consider individual circumstances.

Recommendation

That the submission be declined.