Taxation Principles Reporting Act 2023
Taxation Principles Reporting Act 2023: repealed, on 23 December 2023, by section 4 of the Taxation Principles Reporting Act Repeal Act 2023 (2023 No 70).
Version as at 23 December 2023
Taxation Principles Reporting Act 2023
Public Act |
2023 No 55 |
|
Date of assent |
30 August 2023 |
|
Commencement |
see section 2 |
Taxation Principles Reporting Act 2023: repealed, on 23 December 2023, by section 4 of the Taxation Principles Reporting Act Repeal Act 2023 (2023 No 70).
Note
The Parliamentary Counsel Office has made editorial and format changes to this version using the powers under subpart 2 of Part 3 of the Legislation Act 2019.
Note 4 at the end of this version provides a list of the amendments included in it.
This Act is administered by the Inland Revenue Department.
Contents
The Parliament of New Zealand enacts as follows:
1 Title
This Act is the Taxation Principles Reporting Act 2023.
2 Commencement
This Act comes into force on the day after the date on which it receives the Royal assent.
Part 1 Preliminary provisions
3 Purpose
The purpose of this Act is to oblige the Commissioner to report on New Zealand’s current taxation settings.
4 Interpretation
In this Act, unless the context otherwise requires,—
approved taxation principles measurements means measurements described in section 12 or approved in accordance with section 13
Commissioner means the Commissioner of Inland Revenue
Commissioner’s report means a report, prepared by the Commissioner, on New Zealand’s current taxation settings in relation to the taxation principles in this Act, as measured using the approved taxation principles measurements
Minister means the Minister of Revenue or, if there is no Minister of Revenue, the Minister responsible for the Inland Revenue Department
revenue Act means an Act listed in schedule 1 of the Tax Administration Act 1994, including this Act
tax year has the same meaning as in the Income Tax Act 2007
taxation principles means the tax system principles provided in schedule 1 of this Act.
5 Act binds the Crown
This Act binds the Crown.
6 No effect on revenue
(1)
Despite this Act being a revenue Act, the Commissioner’s duty, under section 6A(2) of the Tax Administration Act 1994, to collect over time the highest net revenue that is practicable within the law does not apply to the Commissioner’s duties under this Act.
(2)
This Act does not affect quantification of a taxpayer’s liability under a revenue Act or in legal proceedings (see section 7).
7 Justiciability
(1)
Commissioner’s reports and this Act (including the taxation principles) may not be used as evidence as to any matter of law or fact in legal proceedings other than in judicial review proceedings as to the Commissioner’s duties in preparing a Commissioner’s report.
(2)
Commissioner’s reports and this Act (including the taxation principles) may not be used in the interpretation of any matter of law or fact in legal proceedings other than in judicial review proceedings as to the Commissioner’s duties in preparing a Commissioner’s report.
8 Information and privacy
In performing the Commissioner’s obligations under this Act,—
(a)
the Commissioner may use any information the Commissioner holds if the information was gathered and is held, lawfully, for any purpose, including if the information was gathered lawfully and specifically to help the Commissioner perform the Commissioner’s obligations under this Act; and
(b)
the Commissioner must ensure that all information in a Commissioner’s report is anonymised and aggregated.
9 Consequential amendments
Schedule 2 provides consequential amendments to other Acts.
Part 2 Taxation principles reporting
10 Duty to report: annual interim and triennial full
(1)
The Commissioner must give the Minister an interim Commissioner’s report annually, before the end of a calendar year, for the tax year that ends in the calendar year, using the best information that the Commissioner has on hand at that time.
(2)
Once every 3 calendar years, starting with the 2025 calendar year, the Commissioner must give the Minister a full Commissioner’s report, before the end of the calendar year, for the 3 previous tax years that end in the calendar year, using the best information that the Commissioner has on hand at that time.
(3)
The Commissioner must not prepare an interim Commissioner’s report in a calendar year in which the Commissioner prepares a full Commissioner’s report.
(4)
A Commissioner’s report must take into account the impact of the tax system on different communities of taxpayers within New Zealand.
11 Presentation and publication
(1)
The Commissioner must publish a copy of the interim Commissioner’s report at the Commissioner’s expense as soon as it is reasonably practicable after the Commissioner gives the Minister the report.
(2)
The Minister must present a copy of the full Commissioner’s report to the House of Representatives as soon as it is reasonably practicable after the Commissioner gives the Minister the report. The Commissioner must publish a copy of the full Commissioner’s report at the Commissioner’s expense as soon as it is reasonably practicable after the Minister presents a copy of it to the House of Representatives.
12 Approved taxation principles measurements
The approved taxation principles measurements for the purpose of this Act are as follows:
(a)
income distribution and income tax paid:
(b)
distribution of exemptions from tax and of lower rates of taxation:
(c)
perceptions of integrity of the tax system:
(d)
compliance with the law by taxpayers.
13 Approved taxation principles measurements: approval procedure for inclusion and exclusion
(1)
The Commissioner may include measurements beyond the minimum set described in section 12 for the purpose of this Act if—
(a)
the Commissioner decides the new measurements are appropriate for inclusion as approved taxation principles measurements; and
(b)
the new measurements are within the direct responsibility of the Commissioner in relation to the tax system; and
(c)
the Commissioner publishes, in a publication of the Commissioner’s choosing, a description of the new measurements 2 months or more before the Commissioner uses them in a Commissioner’s report.
(2)
The Commissioner may exclude measurements that the Commissioner has included under subsection (1) but subsequently decides are inappropriate for the purpose of this Act, if the Commissioner’s decision to exclude the inappropriate measurements is published in a publication of the Commissioner’s choosing 2 months or more before the Commissioner does not use them in a Commissioner’s report.
Schedule 1 Tax system principles
1 Purpose of taxation
The main purposes of a tax system are to—
(a)
raise revenue to finance government expenditure:
(b)
correct behaviour or market failures.
2 Key principles
The key principles considered for designing or changing a tax system, as measured by the approved taxation principles measurements, are set out in the following table:
| Key principle | Description |
| Horizontal equity | Horizontal equity is the extent to which people with similar levels of economic income pay similar amounts of tax. In considering horizontal equity, the time value of money matters and the tax system should generally recognise the economic effect of income. In considering horizontal equity, there are important areas where exemptions to taxing economic income are justified in the pursuit of wider societal outcomes (for example, not taxing the imputed rent or gains on an owner-occupied home). |
| Efficiency | Efficiency is the extent to which tax revenue is raised in ways that minimise costs to the economy, including distortions. |
| Vertical equity | Vertical equity is the extent to which the tax system is progressive. Tax is progressive if people with higher levels of economic income pay a higher proportion of that income in tax. A progressive tax system does not mean that every tax is progressive (for example, GST is regressive relative to income) but the overall system ought to be. In practice, wealthy people should pay no lower an average rate of tax relative to their economic income than middle-income New Zealanders. |
| Revenue integrity | Revenue integrity is the extent to which the tax system is sustainable over time and minimises opportunities for tax avoidance and tax evasion. |
| Compliance and administrative costs | Compliance and administrative costs is the extent to which compliance and administrative costs for taxpayers and the Government are reasonable, but minimising costs is not justification for substantial unfairness in the tax system. |
| Certainty and predictability | Certainty and predictability is the extent to which the tax system is coherent and transparent and taxpayers are able to determine their tax obligations before they are due. |
| Flexibility and adaptability | Flexibility and adaptability is the extent to which the tax system keeps pace with changes in society, in particular technological and commercial developments, and changes in inequality or comparative wellbeing. |
Schedule 2 Consequential amendments
1 Tax Administration Act 1994
In schedule 1 of the Tax Administration Act 1994, insert, in appropriate alphabetical order, “Taxation Principles Reporting Act 2023”
.
Notes
1 General
This is a consolidation of the Taxation Principles Reporting Act 2023 that incorporates the amendments made to the legislation so that it shows the law as at its stated date.
2 Legal status
A consolidation is taken to correctly state, as at its stated date, the law enacted or made by the legislation consolidated and by the amendments. This presumption applies unless the contrary is shown.
Section 78 of the Legislation Act 2019 provides that this consolidation, published as an electronic version, is an official version. A printed version of legislation that is produced directly from this official electronic version is also an official version.
3 Editorial and format changes
The Parliamentary Counsel Office makes editorial and format changes to consolidations using the powers under subpart 2 of Part 3 of the Legislation Act 2019. See also PCO editorial conventions for consolidations.
4 Amendments incorporated in this consolidation
Taxation Principles Reporting Act Repeal Act 2023 (2023 No 70): section 4