Media Release - 23 June 2011
Senior Communications Manager
+64 274 899 700
+64 9 300 7065
Taxpayers face greater uncertainty
23 June 2011
A controversial change included in Inland Revenue’s latest Tax Administration and Remedial Matters Bill, which is on its way to receive approval, will have a major impact on Taxpayers’ rights. The Bill removes the right to opt out of the formalised and costly tax disputes process in favour of a review by the judiciary.
This change was included despite rather impassioned submissions against it from tax experts and it could be argued that the battle is lost.
But EY Tax Partner Jo Doolan is encouraging taxpayers not to take a defeatist attitude.
The life line for taxpayers is hidden in the Officials Report and confirms that Revenue Minister Hon Peter Dunne wants to try the new system for two years and a review will be undertaken. This means taxpayers need to be very vocal in letting the Minister know every time the system is not working for them.
Doolan adds the current tax climate could hardly be described as taxpayer friendly, with the cost benefit of tax disputes often forcing taxpayers to concede to tax positions that are not considered technically correct.
While the pursuit of tax dollars is the mandate given to the Inland Revenue by the Government, there is a point where taxpayers may feel the integrity of the tax system is undermined and may work against our system of voluntary compliance.
Kirsty Keating, leader of EY's Tax Controversy Practice, says taxpayers will need to engage a tax expert for advice at a very early stage if there is a dispute. The impact of the new rules will mean a real limitation on a taxpayer's right to access the Court as the taxpayer will have to ask the party they are having the dispute with, the Commissioner, for permission to have the matter considered by an impartial Court, rather than Inland Revenue's own Adjudication Unit, if the Bill is passed.
Given the appearance of the tax system being fair, the removal of this taxpayer right will need to be very carefully managed.
“In this time of desperate need for growth in tax dollars,” says Doolan. “Our focus needs to be on economic growth, not on squeezing the last piece of tooth paste from the tube.”
For more information please contact
Clare Farrant. Communications Manager. EY. NZ 027 489 9700
Joanna Doolan. Tax Partner EY. 027 493 5627
Kirsty Keating. Executive Director. EY. 027 489 9090
EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com.
EY refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
This news release has been issued by EY New Zealand, a member firm of Ernst & Young Global Limited.