Archive of Speeches and Presentations

Leadership and Inland Revenue
17 October 2006

Presentation delivered by David Butler at the Organisational Development Conference

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Introduction

An effective and efficient tax administration is fundamental to the functioning of the economy. However, Inland Revenue is more than a collector of taxes. Our primary outcome is Improving the economic and social wellbeing of New Zealanders.

The revenue we assess helps fund government programmes and the payments people receive help New Zealanders to participate in society.

Most New Zealanders are willing to meet their obligations of their own accord and this means we need to make it easy for them to do so. At the same time, we need to make it hard for people to avoid or evade their obligations.

Our business plan, Our Way Forward, describes how we plan to build on our existing strengths and how we plan to position our organisation for the future.

One of the most important areas that we will continue to focus on is the ongoing leadership development of our people. It is vital that Inland Revenue has strong and credible leadership that is enhanced through succession planning and career development. We have a responsibility and commitment to managing our leadership not only for our own needs but for the benefit of the state services as a whole.

This is one of the most important areas for us to get right and will help enable our people to achieve our desired future.

David Butler
Commissioner of Inland Revenue
October 2006

Inland Revenue's Desired Future

• Inland Revenue is responsive in meeting the changing and increasing expectations of government and society
• We make it easy for customers to get it right and hard to get it wrong
• Society has confidence that appropriate action will be taken against customers who do not comply
• Increasingly, paying tax is seen as contributing to society
• We are professional, approachable, effective and efficient

Government Priorities

Economic Transformation
working to progress our economic transformation to a high income, knowledge based market economy, which is both innovative and creative and provides a unique quality of life to all New Zealanders
Families - young and old
all families, young and old have the support and choices they need to be secure and be able to reach their full potential within our knowledge based economy
National identity
All New Zealanders to be able to take pride in who and what we are, through our arts, culture, film, sports and music, our appreciations of our natural environment, our understanding of our history and our stance on international issues

Inland Revenue's primary Outcome

• Improving the economic and social wellbeing of New Zealanders

Inland Revenue's intermediate Outcomes

• Revenue is available to fund government programmes through people meeting payment obligations of their own accord.
• People receive payments they are entitled to, enabling them to participate in society.

Our Charter

Our Charter
Inland Revenue collects money to pay for public services and helps people to meet their obligations. We work within the Inland Reveneue acts and other relevant laws. We also work in ways consistent with the spirit of the Treaty of Waitangi.
How we will work with you
We will be prompt, courteous and professional. We will follow through on what we say we will do. We acknowledge your individual, cultural and special needs and will look for solutions to them. The person you are dealing with will give you their name. We will continually improve our service by collecting information about how we are doing and using it to raise our performance.
Reliable advice and information
We will provice you with reliable and correct advice and information about your entitlements and obligations. We will assist you to get in touch with the right people for your needs. We will be well-trained and competent. We will keep looking for new and better ways to give you advice and information.
Confidentiality and privacy
We respect your privacy and treat all information about us as private and confidential. Information you provide will be kept secure and will be used or disclosed only as required by law.
Consistency and equity
We will apply the law consistently so everyone gets their entitlements and pays the right amount. We will take your particular circumstances into account as far as the law allows us to.
Your right to question us
You can question the information, advice and service we give you. We will inform you about options available for resolving disagreements and we will work with you to reach an outcome quickly and simply. For this Charter to work effectively, we rely on each taxpayer to provide all the relevant information when dealing with Inland Revenue. Signed by: David Butler Commissioner of Inland Revenue

Keypoints from our tax payer charter:

• we will be prompt, courteous and professional—we acknowledge individual, cultural and special needs and look for solutions to them
• we will provide reliable and correct advice and information about entitlements and obligations
• we respect taxpayer privacy and treat all information about taxpayers as private and confidential
• we will apply the law consistently so that everyone gets their entitlements and pays the right amount we will take particular circumstances into account as far as the law allows
• taxpayers have the right to question the information, advice and service we provide
• we work in ways consistent with the spirit of the Treaty of Waitangi.

Our Strategic Direction

Our framework for our plans and tactics:

• Target and tailor our activities through understanding our customers
• Optimise organisational efficiency and reduce compliance costs over time
• Create an environment which promotes compliance
• Continually invest in our people and the tools to deliver our future outcomes

Target and tailor our activities through understanding our customers

To continually improve customer compliance over time, we need to understand what will influence different customer groups to voluntarily meet their obligations to the maximum extent possible - customer insight.

To do this we will develop approaches to understand what information we need as well as what risks to the revenue may arise. We want to be able to gain real insights into customer behaviours and attitudes. This knowledge will become part of our normal decision-making process so we can be a more responsive and agile organisation, in tune with the changing demands of society.

These insights will help us design and deliver future interactions for our customer and enable us to do the following across all the activities we administer:

• improve our ability to develop policy and provide advice to ministers
• design our future systems and processes to make it easy for customers to comply and hard to avoid
• respond to new or changing needs, and develop more innovative solutions
• develop and maintain channels that meet both the customers’ and our needs.

Optimise organisational efficiency and reduce compliance costs over time

To meet the growing expectations on us we must continually develop smarter ways of working and organising ourselves. At the same time, we must keep in mind our goals of delivering our outcomes and encouraging voluntary compliance. We will achieve this by focusing on:

• actively participating in delivering “joined up” services across government agencies to provide a seamless approach to customers
• making our processes easy to use, effective and efficient, by focusing on our high-volume transactions to actively encourage the use of low-cost channels and processes.
• making the most of the advantages of future “e” technology opportunities for both customers and Inland Revenue
• working collaboratively and gathering and sharing information smartly - making it readily available in a way that is coordinated, accurate and containing all the information to meet customers’ needs
• identifying and pursuing organisational cost savings
• developing our future workflows and processes to build a flexible and responsive organisation.

Reducing compliance costs
We also recognise the burden on customers in complying with the laws we administer. To reduce the associated risks of non-compliance we will:

• use the information and insights we gain to strengthen our ability to provide alternative and lower compliance cost solutions
• seek to reduce these burdens on our customers over time by continuing to make this an important consideration in policy development, systems design and delivery processes

Create an environment which promotes compliance

If we expect customers to meet their obligations voluntarily we must keep making it as easy a possible for them to do so. We also have a responsibility to make it hard to avoid meeting their obligations. We do this by creating an environment that informs customers of their obligations and encourages them to comply. We all have a role individually and collectively in maintaining a positive public profile of Inland Revenue within our society – this is integral to maintaining and improving voluntary compliance

Our compliance model

The model guides us in tailoring how we deal with our customers. It takes account of the factors that influence customer’s decisions and behaviours. We will use and refine the compliance model across all the activiites we administer. In applying the model we will:

• build strong relationships and partnerships – providing the right experience for customers through the right channels and making it easy to comply
• appropriately enforce the law to help move customers who have decided not to comply to a position where they are likely to do so in the future
• take an integrated approach, using both specialist and cross-functional teams to optimise our customer-understanding, risk assessment and compliacne model thinking.

Underpinning the model is the need for us to maintain and build on our core technical, legal and policy skills.

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Continually invest in our people and the tools to deliver our future outcomes

As a team of passionate and engaged people, equipped with the right tools and skills, we will successfully deliver our outcomes and achieve our desired future. We need an organisation where our people are technically-skilled and professional. It’s also important that we have the right tools and infrastructure to help us be an agile and technologically-smart organisation. We will continually invest in our people, the tools they use and the environments they operate within.

We will achieve this by ensuring our people:

• experience great leadership, with technical and people leadership being enhanced though succession planning and career development
• feel part of a learning organisation, sharing knowledge and learning from our collective experiences
• are proactively equipped with the right skills and experiences to do their current roles and to develop along their chosen career path. We will build on and enhance our critical skills such as legislative knowledge and relationship management
• are part of a passionate and engaged team who have clear goals and are recognised for their contribution and commitment.

Investment in our tools will focus on:

• ensuring our people have the right tools, including property, information, easy-to-use systems and processes
• continually investing in and maintaining a workplace that allows for ongoing agility in meeting our future objectives
• maintaining the integrity and sustainability of our systems and processes
• providing our customers with the right tools to make it easy for them to voluntarily comply.

Leadership of Change

Need for change must be recognised and, if not, created.

1. Clear direction (vision) for the future
2. Clear plan to achieve that vision
3. Ensure stakeholder buy-in
4. Ensure buy-in from your people
5. Provide tools, resources and support for your people

Kotter's 8 Step Process

1. Establishing a greater sense of urgency
2. Creating the guiding coalition
3. Developing a vision and strategy
4. Communicating the change vision
5. Empowered others to act
6. Creating short term wins
7. Consolidating gains and producing even more change
8. Institutionalising changes in culture

My tips

1. Keep communicating
2. Keep asking questions
3. Keep listening
4. Keep achieving
5. Keep striving for improvements
6. Keep thinking
7. Keep growing

The Role of Inland Revenue:

• Advises government, along with The Treasury, on tax policy and social policy measures
• Collects tax payments, child support and student loans
• Distributes family assistance, child support, paid parental leave and tax refunds and rebates
• Manages a customer base of 5.9 million (individuals, businesses, partnerships, trusts and other entities)
• Manages high volumes (2004/05)
  - 8.2 million customer contacts
  - 7.6 million returns
  - 7.7 million payments
• Works together with over 4,700 tax agents who represent 1.7 million customers
• Operates from 17 cities and towns
• Employs over 5,200 people

Key results

For the year ended 30 June 2005, Inland Revenue:

• Collected 85% of government’s revenue ($42 billion in 2004/05 and $44 billion in 2005/06)
• Received $510 million student loan repayments
• Collected and distributed $309 million in child support
• Distributed $520 million in family assistance
• Distributed $76 million in paid parental leave

Tax issues which may be examined by Inland Revenue

Information related to Tax Risk Management is readily available on the internet. However, the following checklist may be helpful when considering tax risks:

1. Financial or tax performance that varies substantially from industry patterns
   Inland Revenue now more systematically considers these issues and makes comparisons both within New Zealand and with other jurisdictions.
2. Significant variations in the amounts or patterns of tax payments compared to past performance and relevant economic indicators and industry trends
   Inland Revenue routinely scrutinises payment patterns and compares these to economic and industry trends.
3. Unexplained variations between economic performance, industry performance and tax payments
   Inland Revenue will examine internal structures, loans between companies, interest deductions and make comparisons between accounting and taxation treatments of transactions.
4. Unexplained losses, low effective tax rates, and any instances of an entity consistently paying relatively low tax
   Clearly losses can arise but if these appear to be unexplainable Inland Revenue will likely seek further information. Patterns of tax payments over time will also be considered.
5. A history of unacceptable tax planning by a company, a group, board members, key executives or advisers
   Inland Revenue will take all of these issues into account when considering what further scrutiny of an entity may be necessary.
6. Weaknesses in structures, processes and approaches to tax compliance
   If it is evident to Inland Revenue that there are weaknesses in practices this will attract our attention.
7. Tax outcomes that are inconsistent with the policy intent of any legislative reform
   The impact and consequences of legislation changes will be considered by Inland Revenue. This will particularly be the case where change is directed at an unacceptable tax practice.

How you may assist your client

Given that Inland Revenue has and will continue to focus on risks to tax compliance, how may you assist your clients who are chairs or directors of companies? The following questions would be worth further consideration:

1. What level of confidence does your client have in the correctness of advice received?
2. Is the advice based on the actual transaction or on an expectation of how the transaction will be implemented?
3. Is your client satisfied that the factual basis for an opinion to the board has been properly checked?
4. How likely is it that Inland Revenue will take a different view of the application of the law and assess a company accordingly?
5. If Inland Revenue takes a different view and the matter proceeds to litigation, what is the risk of a court deciding the matter in favour of Inland Revenue? If litigation were to arise how well equipped is the company to deal with this?
6. What is the potential downside if the company is unsuccessful in litigation with Inland Revenue including interest and penalties?
7. If there is a dispute, what is the likelihood of Inland Revenue being prepared to settle the dispute and, if so, on what terms?
8. How likely is it that Inland Revenue will identify the tax issues that arise from the proposed course of action? Allied with that, to what extent will embarking on the proposed course of action increase the tax risk profile of the company and increase the possibility of audit scrutiny?
9. In light of the potential risk, would it be desirable to approach Inland Revenue for guidance in the form of a binding ruling?
10. Where a position has been taken on a tax issue, would it be desirable to constructively handle any disagreements which may ensure?

Our online services include:

• Look at your tax account information
• Send and receive mail
• File tax returns
• File an employer schedule (ir-File)
• Register as an employer
• Register for GST
• Request a summary of earnings and/or personal tax summary
• Use the tax due date calculator
• Request forms and guides
• Make a general enquiry, complaint or compliment
• Arrange for an Inland Revenue business advisory officer visit
• Subscribe to Inland Revenue publications and newsletters

 

 

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Corporate Communications
Inland Revenue

For all media enquiries phone: 04 890 1698

For general communications enquiries
Phone: (04) 890 1936
Email: corpcomm@ird.govt.nz
Fax: (04) 498 5809

P O Box 2198
12-22 Hawkestone Street
Wellington
New Zealand

  

Date published: 17 Oct 2006

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