Inland Revenue activities
The Budget papers include Vote Revenue as a document providing a breakdown of Inland Revenue expenses. Vote Revenue includes the following items:
- $171.983 million is spent on Inland Revenue’s investigation, audit and litigation activities
- $152.255 million is spent to prevent returns becoming outstanding and debt becoming overdue and to collect overdue payments
- $10.608 million is spent on the provision of policy advice
- $2,628 million is the cost of the Family Support tax credit
- $850 million is the cost of the KiwiSaver tax credit
- $360 million is the cost of Paid Parental Leave Payments
- $6.5 million is the cost of the subsidy paid to payroll agents, and
- $597.817 million is the estimated appropriation remaining of the appropriation for the design and implementation of Inland Revenue’s Business Transformation Programme.
The item for the provision of policy advice is separate from the cost of the Tax Working Group. The budgeted cost of the Tax Working Group is $4 million over the 2017/18 and 2018/19 financial years.
Vote Revenue also budgets for the following impairments:
- $680 million write-off for bad debts exclusive of child support and student loans, and
- $610 million for initial fair value write-down of student loans.
On the income side Vote Revenue budgets for a collection of tax revenue totalling $76.559 million. In addition Inland Revenue expects to collect non-tax revenue of $1.111 million and capital receipts of $1.529 million.
Of Inland Revenue’s projections, the Treasury’s Budget Economic and Fiscal Update 2018 observes that the Treasury’s forecasts of core Crown tax revenue are, on average, 0.2% higher than Inland Revenue’s forecasts. The difference is said to be attributable to the different modelling methods that each agency uses to forecast some of the larger tax types such as PAYE, RWT and road user charges.
Some insight into the dimensions of tax in dispute is given by the Budget papers showing contingent liabilities of:
- $137 million for legal tax proceedings, and
- $148 million for other legal proceedings and disputes.
The first of these sums relates to tax in dispute under challenge proceedings, whilst the latter is in the nature of tax debt recovery. These seem relatively minor items.
Also small-scale is the item of $130 million shown as a contingent asset for legal proceedings and disputes.
Tax practitioners may also be interested to learn that the Budget papers forecast the tax cost of the measure to “ban overseas speculators from buying existing houses”, which is projected to be $5.3 million for 2017/18 and $6.8 million for 2018/19.