Since 2012, Inland Revenue has delivered around 40 Bills to Parliament. The Bills included legislation that enabled transformation of the tax system and 5 COVID-19 Bills that we developed at great speed so we could give our customers financial support when they needed it most.
On 1 April 2022 more than 100 law changes were introduced. These include:
- increases to Working for Families Tax Credits
- new ways for KiwiSaver members to change their contribution rate
- a requirement for trusts to provide more information on their annual returns for the 2022 tax year onwards
- an extension of the bright-line property rule to 10 years for property bought on or after 27 March 2021 (for new builds, the bright-line period is 5 years)
- limits on deducting loan interest from rental income.
With the extensive policy changes for modernising the tax system now completed, our work is focusing on a wider range of issues and Government priorities such as overall integrity of the tax system and the next phase of international tax reform. We're also working on a Tax Principles Bill, which will enable us to report on various aspects of the design of the tax system such as fairness.
A significant proportion of our business involves delivering social policy payments such as Working for Families, and administering KiwiSaver and student loans. We're combining our policy, operational and digital expertise, and working together with other government agencies and tax agents, to tackle some key issues facing families and whānau.
Read more about the Tax and Social Policy Work Programme.
Passing on child support payments to 41,500 families
Inland Revenue currently holds onto child support payments for some beneficiaries, to offset the cost of their benefits. However, this means parents have fewer financial resources available to support their children. In 2019, the Welfare Expert Advisory Group recommended that child support payments be passed on to all sole-parent beneficiaries, rather than being held by us. Overseas research has shown that passing these payments on improves the paying parent’s engagement with their children.
Before we could start making this change, COVID-19 hit and this work got delayed. But in May 2021, our policy team and Te Manatū Whakahiato Ora the Ministry of Social Development (MSD) started to look at ways to progress this work.
From 1 July 2023, approximately 41,500 sole-parent families will benefit by a median gain of $24 per week (the first payments will be passed on to families in August). We’ll pass on approximately $155 million to sole-parent families each year, which will help lift up to 14,000 children out of poverty.
To introduce this, we need to design and implement changes to current legislation and to our technology systems. We’re working with MSD to consult New Zealanders on sharing information about child-support payments with the Ministry so these can be included as income for the purpose of calculating people’s benefits. This will streamline the process for beneficiaries receiving child support.