Annual Report 2008: Introduction
From the Commissioner
Inland Revenue's primary outcome is improving the economic and social wellbeing of New Zealanders. We achieve this by collecting revenue and distributing social policy payments to customers. Through this, we contribute to the government's priorities of economic transformation, families young and old, national identity, and sustainability.
Scope of Inland Revenue's business
Inland Revenue is responsible for:
- advising government, with The Treasury, on tax policy and social policy measures that interact with the tax system
- 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 and the R&D tax credit.
We deal with large numbers of customers,[1] often on complex and sensitive matters. We have:
- 6,518,000 taxpayers (individuals, businesses, partnerships, trusts and other entities)
- more than 716,000 KiwiSaver members
- 530,000 student loan borrowers
- 198,000 customers receiving regular Working for Families Tax Credits payments
- 173,000 child support paying parents
- 175,000 child support custodians
- 26,000 paid parental leave recipients.
We also deal with high transaction volumes. This year was a particularly busy year for Inland Revenue. In 2007-08 we:
- collected $51.2 billion in tax, about 87% of core Crown revenue
- responded to 16.34 million customer contacts
- identified $1,449 million in discrepancies through audit activity
- distributed $1,074 million in KiwiSaver funds to scheme providers
- distributed $1,984 million in Working for Families Tax Credits
- collected $367 million in child support payments
- received $550 million in student loan repayments.
Parts two and three of this report provide detailed information about the programmes and services we deliver.
Implementing Kiwisaver
New Zealand's voluntary savings initiative, KiwiSaver, started on 1 July 2007. In the first year, more than 716,000 people joined KiwiSaver, well above the original forecast of 186,000, and $1,074 million in KiwiSaver funds was passed to providers. During the year we also developed and implemented the enhancements to KiwiSaver announced in Budget 2007. These included member tax credits, compulsory employer contributions and the associated employer tax credit.
The high uptake of KiwiSaver was challenging for our people, IT systems and processes and we had some delays in processing employee deductions. Overall, we have successfully implemented the scheme and this is reflected in our KiwiSaver customer satisfaction result of 77%.
Inland Revenue strategy
Our corporate strategy set describes Inland Revenue's strategic direction over the next three to five years in seven areas: compliance, service, operations, communications and stakeholder relations, finance and planning, information technology and people capability. Our annual refresh of the strategies highlighted four key areas of focus:
- targeting resources to improve customer compliance
- making it easier for customers to self-manage
- simplifying business processes
- better measurement and reporting.
Improving compliance
New Zealand uses a voluntary compliance tax system in which our customers assess their own tax obligations. We undertake to make it easy for customers to self-manage by providing them with information and services. We carry out various enforcement activities to ensure that those who don't want to comply meet their obligations.
Examples of our work this year include:
- expanding our range of e-services such as new services for KiwiSaver customers and "My family details and income" for Working for Families Tax Credits customers
- implementing the business tax reform package, which reduced the company tax rate and introduced the R&D tax credit
- outreach and education work targeting non-compliance by property speculators
- concluding the rewrite of the Income Tax Act, which was passed by Parliament in October 2007.
Our approach to improving compliance is outlined in detail in Part three of this report.
Inland Revenue's charter
The Inland Revenue charter is one of our most important documents as it represents our promise to customers about how we will work with them. During the year we updated our charter to better reflect our tax and social policy functions. Additional information about our charter is on page 10.
January 2008 Crown Revenue
In January 2008, Inland Revenue identified an error that affected the calculation of Crown Revenue. This subsequently led to the restatement and reissue by The Treasury of the January Crown Financial Statements. While this error had no impact on the audited annual accounts, Inland Revenue and The Treasury investigated the cause of the error and identified improvements to processes. Inland Revenue has implemented the recommendations in the investigation report.
Conclusion
I am proud of what Inland Revenue has achieved this year, particularly given the heavy workload from new initiatives and increased customer demand for our services. We have met or surpassed 65 of our 77 performance measures, or 84%, which is an improvement over 2006-07. We will face significant challenges in 2008-09 and beyond, including transforming how we deliver some of our programmes, to keep pace with customer expectations and technological innovation. That said, I am confident Inland Revenue has the capability to achieve our outcomes now and in the future, and in so doing, contribute to a successful New Zealand.
Robert Russell
Chief Executive and Commissioner of Inland Revenue
1 The number of taxpayers as at 31 December 2007. All other customer numbers are as at 30 June 2007.
Date published: 15 May 2009
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