Show Me The Money: Inland Revenue’s new mantra

Under the guise of COVID urgency, the government passed a range of measures last year with the highly profiled measures been the subsidies and loans. However as part of those measures, the government also passed increased powers of information gathering for what they have termed “for a purpose relating to the development of policy for the improvement or reform of the tax system”.

This legislation has been passed without consultation, scrutiny or Select Committee review and then under urgency at a time when NZ has entering a period of total uncertain.

So the first strong arming of this legislation been used is in the proposed new reporting requirements for NZ trusts, which has been passed with effect from 1 April 2022 and with the IRD woring through what is going to have to be disclosed in detail. What we know is there is going to more compliance costs for trusts – to what extent that is still unknown.

You may have also read in the papers that the IRD have issued information request letters to high wealth individuals to participate in the “project” to assist with the IRD to understand effective tax rates and help them to create a comprehensive picture of the tax system. Although I haven’t seen a letter, it has been publicised that the letter specially compels these individuals to provide the information as requested under the powers of gathering information legislation. Watch this space as we have already heard that there are a number of potential injunctions being considered!