Statement of Intent 2007-10: Part three - Our strategic direction
Create an environment which promotes compliance
The community needs to be confident that Inland Revenue can identify and appropriately address non-compliance where it occurs.
The Tax Administration Act 1994 expects customers to meet their obligations voluntarily, so we need to make it:
- easy for customers to meet their obligations of their own accord
- hard for customers to avoid meeting their obligations.
Our compliance model (Figure 12) shows the range of attitudes to compliance, from customers willing to do the right thing, through to those deliberately choosing to break the law. The compliance model takes account of these attitudes and the factors that influence customers' decisions. This helps us to improve compliance by:
- building strong relationships and partnerships by providing the right experience for customers through the right channel and making it easy to comply
- enforcing the law to help move customers who have decided not to comply to a position where they are likely to in the future
- taking an integrated approach to target and tailor specific compliance activities, using our customer understanding, risk assessment and compliance model thinking.
Figure 12
Our compliance model
Delivering our services and managing compliance risks
Our ability to improve compliance depends on an effective and efficient tax administration with a solid framework of legislation and delivery processes. We deliver a wide range of services - from informing customers about their obligations and entitlements through to assuring customers that they have done the right thing.
We will further enhance our effectiveness in the coming years using the compliance model to:
- assess compliance risks and respond appropriately
- use our customers' perspectives to develop services that will help them comply
- continue to provide government with sound advice on the design of tax and social policy law
- enhance our electronic services so customers prefer to contact us this way - our services will be simpler, faster and more personalised
- deliver efficient and effective processing services and use an end-to-end return and payment processing approach
- continue to make other administrative improvements to strengthen our ability to address compliance concerns, for example, developing our people's skills and knowledge.
Future compliance focus
We will continue to apply the compliance model thinking and our risk assessment approach to manage compliance concerns.
For customers who:
- do their best to comply, we will design responses that make it easy for them to get it right and hard to get it wrong
- choose not to comply, we will respond by enforcing the law, which maintains overall confidence in the tax system, encourages ongoing compliance, and makes customers become more likely to comply voluntarily in the future.
Addressing deliberate non-compliance maintains public confidence in our administration and protects the tax system's integrity. We will continue to address compliance issues by identifying and assessing compliance risks, particularly around:
- the business tax base, for example, making sure that taxpayers disclose gains on property transactions and pay tax if the profits are taxable
- the corporate tax base, for example, looking at the activities of private equity funds, which have the potential to undermine New Zealand's corporate tax base
- individual tax planning that takes advantage of differentials in tax rates
- GST misuse arising from the use of phoenix company schemes and fraud
- managing the level of overdue debt across Inland Revenue's debt portfolio, focusing on complex debt avoidance arrangements and audit-assessed debt.
Part Four (Forecast service performance) shows how we will measure our performance in delivering our services and improving compliance.
Date published: 22 Jun 2007
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