2. Scope of activities
Inland Revenue’s three main responsibilities are:
- revenue raising and collection;
- administering social policy programmes – child support, student loans, paid parental leave, Working for Families tax credits and KiwiSaver; and
- providing policy advice—we provide advice to the Government (with the Treasury) on all aspects of tax policy and social policy measures that interact with the tax system, including drafting legislation.
The following sections outline the regimes for which Inland Revenue is responsible or delivers a significant policy and operational function.
Revenue raising and collection
Inland Revenue designs and collects taxes on the consumption of goods and services in New Zealand and income from employment, investment and business conducted in New Zealand. This revenue of around $60 billion per annum resources approximately 80 percent of government activity each year.
All New Zealanders directly or indirectly interact with the tax system throughout their lives. For most this is a minimal interaction through the deduction of Pay As You Earn (PAYE) withholding tax from salary or wages, resident withholding tax (RWT) from interest, or as GST is collected by a vendor at the point of sale of a good or service.
More complex interactions with the tax system are experienced by businesses that may be subject to provisional tax, fringe benefit tax or company tax. This later group of taxpayers are represented by sophisticated stakeholder advocates, including:
- Chartered Accountants Australia and New Zealand;
- New Zealand Law Society;
- Corporate Taxpayers Group;
- New Zealand Bankers Association; and
- Financial Services Council.
- Income Tax Act 2007
- Tax Administration Act 1994
- Goods and Services Tax Act 1985
Working for Families tax credits
Working for Families is a package designed to help make it easier to work and raise a family. It pays extra money to many thousands of New Zealand families. Greater financial support is available for:
- almost all families with children, earning under $70,000 a year;
- many families with children, earning up to $100,000 a year; and
- some larger families earning more.
There are four types of tax credits:
- family tax credit;
- in-work tax credit;
- minimum family tax credit; and
- parental tax credit.
Inland Revenue administers the programme jointly with the Ministry of Social Development, distributing $2.5 billion in entitlements to support families.
Key legislation: Income Tax Act 2007
The child support scheme makes sure that:
- parents take financial responsibility for their children; and
- financial contributions from liable parents help to offset the cost of benefits that support their children.
Inland Revenue collects child support payments. In 2013–14 we collected $450 million from 175,000 paying parents and distributed $240 million to custodial parents. The balance goes to the Crown to offset sole parent benefits paid to custodial parents by the Ministry of Social Development.
Key legislation: Child Support Act 1991
KiwiSaver helps individuals save for retirement. Most members build up their savings through regular contributions from their pay. Inland Revenue jointly administers KiwiSaver by collecting contributions and transferring them to scheme providers for investment. In 2013–14 Inland Revenue transferred $4.1 billion to scheme providers on behalf of 2.4 million members.
Key legislation: KiwiSaver Act 2006
Student loans make tertiary study more accessible for New Zealanders to gain skills for employment. Inland Revenue jointly administers the Student Loan Scheme through a programme with the Ministries of Education and Social Development (StudyLink). The Ministry of Education is the lead agency for student loans. StudyLink determines loan eligibility and entitlement and disburses borrowed money. Inland Revenue collects student loan repayments from borrowers.
Key legislation: Student Loan Scheme Act 2011
Paid parental leave
Paid parental leave replaces a proportion of an employee's income from employment when they take parental leave. Paid parental leave is treated as gross income and is subject to deductions for PAYE income tax, student loan repayments and child support.
Key legislation: Parental Leave and Employment Protection Act 1987