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Statement of Intent - 2004 - Part 1

Choosing the right activities to achieve our outcomes - page 17

Our environment

An important part of strengthening our planning process has been to reassess our operating environment and how it is forecast to change. When thinking about the impacts on our business, significant emphasis is placed on us needing to understand our environment. We need to be able to identify emerging opportunities and risks and be reflective and flexible in our approaches so we can continue to meet or exceed expectations.

New Zealand's business structures

Inland Revenue plays a role in the operation of the economy by delivering tax-based policy advice (jointly with The Treasury), administering the government's tax system, collecting revenue, student loan repayments and child support, and distributing income through family assistance, paid parental leave and child support.

There is a direct relationship between the application of the tax system and the relative performance of the economy. Any change in the performance of the economy impacts on our ability to collect the government's revenue. Generally speaking, in good economic times there is an increase in the revenue generated and collected, while in tighter times it is more difficult to generate and collect revenue.

New Zealand's business structure features a small number of large corporate businesses that generate a large percentage of the revenue. However, the majority of New Zealand's businesses are small and medium-sized enterprises; 96.8% of businesses in New Zealand employ 19 or fewer employees. These enterprises employ 42.7% of all full-time equivalents and account for 35.6% of the economy's output*

* SMEs in New Zealand: Structure and Dynamics, Industry and Regional Development Branch, Ministry of Economic Development, September 2003.

We know that businesses have different needs depending on their relative size and the various stages of their lifecycles. For us to achieve our outcomes, we need to respond to those needs. This means that we need to be thinking more about relationship management, reducing compliance costs, simplification and proactive intervention where there are signs of difficulty.

Infrastructure

The public sector continues to evolve and adopt new ways of public management. This means that there will be new influences that we will need to factor into the management of our organisation. These influences include:

  • The ongoing evolution of the managing for outcomes framework. This was instituted in 2001-02 and provides the opportunity to think clearly about the goods and services we produce and how they contribute to achieving real outcomes for the community.
  • An increased focus on cross-agency collaboration. This requires improving approaches to coordinating and aligning actions across particular sectors, for example, the administration of the services provided by the Ministry of Social Development and Inland Revenue to shared customers in areas such as family assistance and student loans.
  • E-government--providing access to government services through electronic channels. Although online services represent a growing trend, we also need to provide alternative methods for those not connected to the electronic world.

The evolution of the public sector and the emergent expectations of the community are important for the way that we design our interactions with people and other agencies. We need to be able to interpret these influences and factor them into the development of our capability to deliver our services in the future.

New Zealand in the international context

There are many international trends that influence the way that New Zealand businesses view and manage their activities. The extent to which New Zealand's businesses embrace these trends also gives rise to a number of taxation issues.

A good example of this is the continued growth in the use of various electronic channels to engage with the global community. Electronic channels provide many opportunities to convey information and reduce the costs of doing business. However, we also need to anticipate and respond to the tax risks associated with conducting business using these channels. Increasing access to the international market through the internet means that many New Zealand businesses now need to have an understanding of international taxation rules as they apply to sales and purchases.

To maintain our position in and effectively engage with the global economy, New Zealand needs to continue to strengthen its international linkages. We are doing this by:

  • active participation in relevant international organisations, including the OECD, the Commonwealth Association of Tax Administrations and the Study Group on Asian Tax Administrations and Research
  • keeping up-to-date with overseas tax developments, particularly Australia , given changes in their tax policy can directly affect New Zealand businesses
  • expanding and maintaining our double tax agreement network, which reduce tax barriers to trade and international investment and enable us to work with other tax administrations.
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Other pages in: Statement of Intent - 2004 - Part 1
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Date published: 16 Nov 2004

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