Statement of Intent 2007-10: Part five - Forecast financial schedules - Crown as administered by Inland Revenue

Notes

Note 1. KiwiSaver

KiwiSaver is a voluntary, work-based savings initiative that is a core component of the Government's savings strategy announced in the 2005 Budget. KiwiSaver is planned to begin on 1 July 2007.

Inland Revenue will administer the scheme using the existing PAYE (pay as you earn) tax system. Inland Revenue will:

• provide information about KiwiSaver to employers for distribution to new employees
• allocate new employees to a default KiwiSaver scheme if no active choice is made
• receive contributions deducted by employers from employee's salary or wages via their employer's employer monthly schedule (EMS)
• forward these members' contributions to their KiwiSaver scheme provider for investment
• administer opt-out processes, contributions holidays, and serious financial hardship withdrawals.

Kiwisaver is a new, voluntary, work-based savings initiative. It aims to encourage New Zealanders savings habits and accumulation of assets. This will help improve their financial wellbeing, particularly in retirement.

KiwiSaver is designed to make it easy for New Zealanders to maintain a regular savings pattern. It also has a range of membership benefits, including a $1,000 tax-free kick-start and subsidised scheme fees. Some people may also be eligible for help with the deposit on their first home.

Kiwisaver expenses (interest, free kick-start and subsidised scheme fees) is recognised as a Crown appropriation in the 2007/08 Financial Schedules.

Note 2. Student loan amnesty

An amnesty for student loan borrowers living overseas came into effect on 1 April 2006 and will finish on 31 March 2008. It aims to:

• remove one of the barriers to borrowers wanting to return to New Zealand
• encourage borrowers into making regular student loan repayments
• help borrowers with overdue repayments to manage their student loan better.

Borrowers who qualify for the amnesty can apply to have their student loan "late payment penalties" written off up to the date of their application. The amnesty applies to borrowers living overseas who:

• had arrears and/or penalties at the start of the amnesty period, or
• have not previously advised Inland Revenue of their absence but will be subject to arrears and penalties once they do so.

Borrowers must apply within the amnesty period to get the benefits of the amnesty. The amnesty is conditional on the borrower meeting their repayment obligations for two years from the date their application is received. The effect of these amendments is to wipe the slate clean for borrowers who are non-resident at 31 March 2006. For borrowers who are resident at 31 March 2006 but who were non-resident at any time before that date, Inland Revenue will not issue any non-resident assessment if they have not already done so. For borrowers who have repaid their loan by 13 November 2006 their account will not be reopened. The impact of this has been recognised in the schedule of forecast operational expenditure.

Note 3. Explanation of transition to NZ IFRS

These financial schedules for the year ending 30 June 2008 are the first financial schedules that comply with NZ IFRS. Inland Revenue has applied NZ IFRS 1 in preparing these financial schedules.

Reconciliation of equity

The following table shows the changes in equity, resulting from the transition from previous NZ GAAP to NZ IFRS as at 1 July 2007.

Note 4. Treasury and Inland Revenue forcasts of tax revenue

Other pages in: Part five - Forecast financial schedules - Crown as administered by Inland Revenue

• Forecast financial schedules for administered accounts - Crown
• Statement of accounting policies and forecast assumptions

Date published: 21 Jun 2007

Back to top