Annual Report 2007: Commissioner's introduction

From the Commissioner

Inland Revenue's roles are to collect revenue for the government, and disburse payments to customers through our social support programmes. The results we achieve contribute to the government's priority areas of economic transformation, families (young and old), national identity, and sustainability.

Key business statistics

Specifically, we are responsible for:

• advising government, with The Treasury, on tax policy and certain social policy measures
• collecting tax payments, child support and student loans
• distributing payments such as tax refunds and rebates, Working for Families Tax Credits, child support and paid parental leave
• administering KiwiSaver (from 1 July 2007).

Inland Revenue deals with large numbers of customers^[1] and high transaction volumes, often on complex and sensitive matters. For example, we have:

• 6,287,000 taxpayers (individuals, businesses, partnerships, trusts and other entities)
• 499,000 student loan borrowers
• 177,000 child support custodians
• 174,000 child support paying parents
• 190,000 customers receiving regular Working for Families Tax Credits payments
• 25,000 paid parental leave recipients.

The 2006-07 year was an extremely busy one for Inland Revenue as we introduced several changes that will have enduring impacts for New Zealanders.

These changes included:

• the preparation and launch of KiwiSaver, the government's voluntary savings initiative
• the introduction of significant new tax measures arising from the business tax review
• the adoption of a new operating model for Inland Revenue.

Against this background, we continued to deliver our core functions effectively, making sure customers can pay their taxes and receive their entitlements.

Delivering our programmes

The New Zealand tax system relies on the principles of voluntary compliance and self-assessment. The majority of New Zealanders want to meet their tax obligations and receive their entitlements, and we support them by delivering services that help customers to comply. Our role is to make it as simple as possible for them to do so, while taking appropriate steps to address non-compliance.

As a result of our efforts in these areas in 2006-07, we:

• collected $48.5 billion in tax, about 89% of core Crown revenue
• responded to 12.9 million customer contacts
• collected $1,850 million in overdue debt
• identified $996 million through audit activity
• distributed $1,672 million in Working for Families Tax Credits
• collected $347 million in child support payments.

Parts Two and Three of this report provide additional information about the programme and services we deliver.

Implementing KiwiSaver

On 1 July 2007, the first phase of KiwiSaver became operational, as we began accepting enrolments. The successful development of the KiwiSaver systems, and the recruitment and training of the staff needed to administer it, were very significant achievements for Inland Revenue.

The development of KiwiSaver required a number of government agencies and private sector organisations^[2] to work together to introduce a voluntary savings initiative that is available to most New Zealanders. Changes were introduced in Budget 2007 and KiwiSaver will continue to be an extremely high priority in 2007-08 and beyond. We are well advanced in preparing for the next phases of KiwiSaver, which involve the delivery of members' contributions to scheme providers and the collection of employers' contributions.

I am very proud of this work by our KiwiSaver teams, and confident that we will administer KiwiSaver successfully over the coming year as it becomes a fully functioning scheme.

Inland Revenue Operations

During the year we introduced a new operating model, intended to make better use of the expertise of our people throughout New Zealand, and ensure greater efficiency and consistency in the delivery of our core programmes. We developed a new five-year strategic plan supported by business and organisational strategies. These developments will help us focus more on our customers, and to be more agile in the way we meet their increasing service expectations.

A world-class tax administration needs a good understanding of its customers' needs, values and attitudes. We will continue to work directly with our customers to better understand their perspectives, and use this knowledge to improve or develop services that make it easy for them to get things right, and hard to get them wrong. Our objectives include increasing voluntary compliance, reducing the costs of doing business with us, and making it quick and easy for customers to take up their entitlements.

Improving compliance

Each year, we take steps to improve voluntary compliance and enhance our ability to address non-compliance. In 2006-07 this included:

• new electronic services such as the second phase of Companies Online, and enhancements to our website, to provide easy access to our information
• monitoring international tax developments to ensure that we can protect New Zealand's tax base
• the business tax review process, which resulted in the reform package announced in Budget 2007
• strengthening our analytical capability, to identify areas of compliance risk, such as non-compliance in the property investment sector.

Part Three of this report has more about our approaches to improving compliance and building our capability.

Going forward

For the first nine months of 2006-07, David Butler was Commissioner of Inland Revenue, and I wish to acknowledge David's exceptional leadership during his tenure. The integrity of a tax system and the success of a tax administration rest on public confidence. Under David's guidance, Inland Revenue saw a marked improvement in its standing in the community, and in its capability to deliver on its outcomes. His legacy is a high-performing organisation that is well-positioned to deliver even better service and improve voluntary compliance in future. We owe him a debt of gratitude and wish him well.

In closing, I am proud of our achievements this year, particularly given our heavy workload, and I am confident that Inland Revenue will continue to perform very well next year and beyond. We have a team of over 5,000 dedicated, well-qualified people who come to work each day to make a difference. It is a tremendous honour for me to have been given the opportunity to serve as Commissioner of Inland Revenue, and I look forward to working with colleagues and stakeholders to make our contribution to a successful New Zealand.

Robert Russell
Chief Executive and Commissioner of Inland Revenue

¹ The number of taxpayers as at 31 December 2006. All other customer base figures are at 30 June 2007.

² These included the Ministry of Economic Development, The Treasury, the State Services Commission and the Retirement Commission. We also worked closely with a range of private sector stakeholders, including investment scheme providers and employer and employee groups.

Other pages in: Commissioner's introduction

• Structure and governance

Date published: 23 Oct 2007

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