Formats and related files
Vote Revenue#
APPROPRIATION MINISTER(S): Minister of Revenue (M57), Minister of Research, Science and Innovation (M84)
APPROPRIATION ADMINISTRATOR: Inland Revenue Department
RESPONSIBLE MINISTER FOR INLAND REVENUE DEPARTMENT: Minister of Revenue
Overview of the Vote#
The Minister of Revenue is responsible for appropriations in the Vote for the 2020/21 financial year covering the following:
- a multi-year appropriation of just under $1,076 million for the implementation of business transformation from 2017/18 to 2021/22
- a total of just under $559 million for services for customers, including services to inform the public about entitlements and meeting obligations, services to process obligations and entitlements, management of debt and unfiled returns, and investigations
- a total of just over $14 million for policy advice and services to other agencies
- a total of just over $213 million for departmental capital expenditure for the purchase or development of assets by and for the use of Inland Revenue
- a total of just over $4,790 million for benefits or related expenses, mainly for tax credits, KiwiSaver payments and benefit payments such as child support and paid parental leave
- a total of just over $11 million for borrowing expenses, relating to interest paid on deposit schemes administered by Inland Revenue, and
- a total of $8,405 million for other expenses, including $6,967 million for the on-payment of employee and employer KiwiSaver contributions collected by Inland Revenue to KiwiSaver providers, $880 million for the impairment and write-off of debt and $558 million for the initial fair value write-down on student loans.
The Minister of Revenue is also responsible for Crown revenue and receipts in the Vote for the 2020/21 financial year covering the following:
- a total forecast of $71,586 million for tax revenue
- a total forecast of just under $908 million for non-tax revenue, and
- a total forecast of $1,427 million for capital receipts.
The Minister of Research, Science and Innovation is responsible for an appropriation in Vote Revenue for the 2020/21 financial year of $281 million for the Research and Development Tax Incentive.
Details of these appropriations are set out in Parts 2-4.
Details of Appropriations and Capital Injections#
Annual Appropriations and Forecast Permanent Appropriations#
| Titles and Scopes of Appropriations by Appropriation Type | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
|
Departmental Output Expenses |
|||
|
Policy Advice (M57) This appropriation is limited to the provision of advice, including second opinion advice and contributions to policy advice led by other agencies, to support decision-making by Ministers on government policy matters. |
11,199 | 11,199 | 10,306 |
|
Services to Other Agencies RDA (M57) This appropriation is limited to the provision of services by Inland Revenue to other agencies, where those services are not within the scope of another departmental output expense appropriation in Vote Revenue. |
5,662 | 4,962 | 3,942 |
|
Total Departmental Output Expenses |
16,861 | 16,161 | 14,248 |
|
Departmental Capital Expenditure |
|||
|
Inland Revenue Department - Capital Expenditure PLA (M57) This appropriation is limited to the purchase or development of assets by and for the use of the Inland Revenue Department, as authorised by section 24(1) of the Public Finance Act 1989. |
114,608 | 114,608 | 213,112 |
|
Total Departmental Capital Expenditure |
114,608 | 114,608 | 213,112 |
|
Benefits or Related Expenses |
|||
|
Best Start Tax Credit PLA (M57) This appropriation is limited to Best Start Tax Credits made to eligible recipients in accordance with section 185 of the Tax Administration Act 1994. |
188,000 | 188,000 | 336,000 |
|
Child Support Payments PLA (M57) Child support payments to custodial persons who are not dependent on the state for financial support (expenses incurred pursuant to section 141 of the Child Support Act 1991). |
295,000 | 295,000 | 272,000 |
|
Child Tax Credit PLA (M57) Extra assistance for low to middle income families who are not dependent on the state for financial support (expenses incurred pursuant to section 185 of the Tax Administration Act 1994). |
100 | 100 | 100 |
|
Family Tax Credit PLA (M57) Family Support payments made to beneficiaries and non-beneficiaries during the year (expenses incurred pursuant to section 185 of the Tax Administration Act 1994). |
2,144,000 | 2,144,000 | 2,139,000 |
|
In-Work Tax Credit PLA (M57) Extra assistance for low to middle income families where the person works a minimum of 20 hours per week and does not have a partner, or a person and their partner work a minimum of 30 hours per week (expenses incurred pursuant to section 185 of the Tax Administration Act 1994). |
603,000 | 603,000 | 631,000 |
|
KiwiSaver: Interest (M57) To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006. |
9,000 | 7,000 | 5,000 |
|
KiwiSaver: Tax Credit (M57) To enable the payment of a tax credit to KiwiSaver members and the payment of residual tax credits to employers as set out in the Income Tax Act 2007. |
912,000 | 902,000 | 930,000 |
|
Minimum Family Tax Credit PLA (M57) Extra payment made to families where at least one parent is working for salary or wages (expenses incurred pursuant to section 185 of the Tax Administration Act 1994). |
20,000 | 20,000 | 22,000 |
|
Paid Parental Leave Payments (M57) This appropriation is limited to Paid Parental Leave Payments made to parents in accordance with the Parental Leave and Employment Protection Act 1987. |
430,000 | 425,000 | 455,000 |
|
Research, Science and Innovation: R&D Tax Incentive (M84) This appropriation is limited to providing an R&D tax credit to eligible R&D performing businesses. |
225,000 | 225,000 | 281,000 |
|
Parental Tax Credit PLA (M57) This appropriation is limited to expenses incurred on parental tax credit as provided for in subpart MD of the Income Tax Act 2007 and as authorised by section 185 of the Tax Administration Act 1994. |
1,000 | 1,000 | - |
|
Payroll Subsidy PLA (M57) This appropriation is limited to the payment of a subsidy to a payroll agent undertaking employers' payroll-related tax compliance activities on their behalf, section 185 of the Tax Administration Act 1994. |
4,000 | 4,000 | - |
|
Total Benefits or Related Expenses |
4,831,100 | 4,814,100 | 5,071,100 |
|
Non-Departmental Borrowing Expenses |
|||
|
Environmental Restoration Account Interest PLA (M57) This appropriation is limited to interest on Environmental Restoration accounts, authorised by section 65ZH(1) of the Public Finance Act 1989. |
1,500 | 1,500 | 1,500 |
|
Income Equalisation Interest PLA (M57) This appropriation is limited to interest on Income Equalisation Reserve Scheme accounts held by taxpayers in the farming, fishing or forestry industries, authorised by section 65ZH(1) of the Public Finance Act 1989. |
6,000 | 6,000 | 10,000 |
|
Adverse Event Interest PLA (M57) This appropriation is limited to interest on Adverse Event Income Equalisation Reserve accounts held by taxpayers in the farming and agriculture business, authorised by section 65ZH(1) of the Public Finance Act 1989. |
10 | 10 | - |
|
Total Non-Departmental Borrowing Expenses |
7,510 | 7,510 | 11,500 |
|
Non-Departmental Other Expenses |
|||
|
Impairment of Debt and Debt Write-Offs (M57) This appropriation is limited to bad debt write-offs for Crown debt administered by Inland Revenue, excluding child support and student loans and to amounts relating to the impairment of this debt. |
1,270,000 | 970,000 | 880,000 |
|
Initial Fair Value Write-Down Relating to Student Loans (M57) This appropriation is limited to the initial fair value write-down of student loans. |
510,000 | 490,000 | 558,000 |
|
KiwiSaver: Employee and Employer Contributions PLA (M57) To enable the on-payment of employee and employer KiwiSaver contributions collected by Inland Revenue to KiwiSaver Scheme providers in accordance with section 73 of the KiwiSaver Act 2006. |
1,856,000 | 1,856,000 | 6,967,000 |
|
Impairment of Debt Relating to Child Support (M57) This appropriation is limited to the impairment of child support debt. |
5,000 | - | - |
|
Total Non-Departmental Other Expenses |
3,641,000 | 3,316,000 | 8,405,000 |
|
Multi-Category Expenses and Capital Expenditure |
|||
|
Services for Customers MCA (M57) The single overarching purpose of this appropriation is to deliver a customer-centric, integrated tax and entitlement service experience for New Zealanders that is agile and intelligence-led. |
652,856 | 641,995 | 558,777 |
|
Departmental Output Expenses |
|||
|
Investigations This category is limited to Inland Revenue undertaking investigation, audit and litigation activities. |
123,110 | 121,052 | 112,201 |
|
Management of Debt and Unfiled Returns This category is limited to activities to prevent returns and debt becoming overdue, and to collect unfiled returns and overdue payments, whether for the Crown, other agencies or external parties. |
93,180 | 91,616 | 82,620 |
|
Services to Ministers and to inform the public about entitlements and meeting obligations This category is limited to the provision of services to help Ministers fulfil their responsibilities to Parliament and the New Zealand public, other than policy decision-making responsibilities, and to provide information and assistance to the public to make them aware of their obligations and entitlements. |
276,502 | 271,991 | 224,410 |
|
Services to Process Obligations and Entitlements This category is limited to the registration, assessment and processing of tax obligations and other entitlements, including associated review and Crown accounting activities, and the collection and sharing of related information with other agencies. |
160,064 | 157,336 | 139,546 |
|
Total Multi-Category Expenses and Capital Expenditure |
652,856 | 641,995 | 558,777 |
|
Total Annual Appropriations and Forecast Permanent Appropriations |
9,263,935 | 8,910,374 | 14,273,737 |
Multi-Year Appropriations#
| Type, Title, Scope and Period of Appropriations | Appropriations, Adjustments and Use | $000 |
|---|---|---|
|
Departmental Other Expenses |
||
|
Transformation (M57) This appropriation is limited to the design and implementation of a modern system for tax revenue and social policy administered by Inland Revenue.Commences: 01 July 2017 Expires: 30 June 2022 |
Original Appropriation | 1,112,607 |
| Adjustments to 2018/19 | 10,154 | |
| Adjustments for 2019/20 | (46,946) | |
| Adjusted Appropriation | 1,075,815 | |
| Actual to 2018/19 Year End | 400,132 | |
| Estimated Actual for 2019/20 | 205,893 | |
| Estimate for 2020/21 | 326,464 | |
| Estimated Appropriation Remaining | 143,326 |
Total Annual Appropriations and Forecast Permanent Appropriations and Multi-Year Appropriations#
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Annual Appropriations and Forecast Permanent Appropriations | 9,263,935 | 8,910,374 | 14,273,737 |
| Total Forecast MYA Departmental Other Expenses | 205,893 | 205,893 | 326,464 |
|
Total Annual Appropriations and Forecast Permanent Appropriations and Multi-Year Appropriations |
9,469,828 | 9,116,267 | 14,600,201 |
Capital Injection Authorisations#
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Inland Revenue Department - Capital Injection (M57) | 103,000 | 103,000 | 154,168 |
Supporting Information#
Part 1 - Vote as a Whole#
1.1 - New Policy Initiatives#
| Policy Initiative | Appropriation | 2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| $25 per week permanent increase to welfare benefits from 1 April 2020 | Tax Revenue Source Deductions | 18,600 | 72,000 | 95,000 | 98,000 | 95,000 |
| Expansion of immediate expensing for low value assets | Tax Revenue Companies | - | (40,000) | (658,000) | 278,000 | (113,000) |
| Expansion of immediate expensing for low value assets | Tax Revenue Other Persons | - | (10,000) | (165,000) | 69,000 | (28,000) |
| FBT on low interest loans - drop prescribed rate from 5.77% to 5.26% | Tax Revenue Fringe Benefit Tax | (815) | (1,100) | (1,100) | (1,100) | (1,100) |
| GST on mobile roaming services - deferral of application date | Tax Revenue Goods and Services Tax (IRD) | - | (3,500) | - | - | - |
| Increasing the threshold for provisional tax | Impairment of Debt and Debt Write-Offs | - | (2,000) | (2,000) | (2,000) | (2,000) |
| Increasing the threshold for provisional tax | Tax Revenue Other Persons | - | (3,000) | (3,000) | (3,000) | (3,000) |
| In-Work Tax Credit removing the hours test | In-Work Tax Credit PLA | - | 32,000 | 32,000 | 32,000 | 32,000 |
| Purchase price allocation between deductible and non-deductible assets | Tax Revenue Companies | - | - | 34,000 | 64,000 | 70,000 |
| Reinstatement of depreciation deductions for commercial and industrial buildings | Tax Revenue Companies | - | (26,000) | (776,000) | (395,000) | (410,000) |
| Reinstatement of depreciation deductions for commercial and industrial buildings | Tax Revenue Other Persons | - | (9,000) | (259,000) | (132,000) | (137,000) |
| Schedule 32 overseas donee status | Tax Revenue Other Persons | - | (100) | (100) | (100) | (100) |
| Tax treatment of Mycoplasma bovis culling compensation | Tax Revenue Other Persons | - | (1,500) | 300 | 300 | 300 |
| Total | 17,785 | 7,800 | (1,702,900) | 8,100 | (496,900) |
1.2 - Trends in the Vote#
Summary of Financial Activity
| 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Actual $000 |
Actual $000 |
Actual $000 |
Actual $000 |
Final Budgeted $000 |
Estimated Actual $000 |
Departmental Transactions Budget $000 |
Non- Departmental Transactions Budget $000 |
Total Budget $000 |
Estimated $000 |
Estimated $000 |
Estimated $000 |
|
|
Appropriations |
||||||||||||
| Output Expenses | 11,050 | 11,386 | 13,055 | 15,080 | 16,861 | 16,161 | 14,248 | - | 14,248 | 13,924 | 13,524 | 13,524 |
| Benefits or Related Expenses | 3,550,477 | 3,621,139 | 3,584,823 | 4,386,025 | 4,831,100 | 4,814,100 | N/A | 5,071,100 | 5,071,100 | 5,358,100 | 5,477,100 | 5,700,100 |
| Borrowing Expenses | 7,907 | 6,783 | 6,202 | 6,524 | 7,510 | 7,510 | - | 11,500 | 11,500 | 11,500 | 11,500 | 11,500 |
| Other Expenses | 1,414,087 | 1,288,208 | 1,407,309 | 1,595,376 | 3,846,893 | 3,521,893 | 326,464 | 8,405,000 | 8,731,464 | 9,227,326 | 9,921,540 | 10,701,040 |
| Capital Expenditure | 61,115 | 100,661 | 103,682 | 107,850 | 114,608 | 114,608 | 213,112 | - | 213,112 | 40,000 | 40,000 | 40,000 |
| Intelligence and Security Department Expenses and Capital Expenditure | - | - | - | - | - | - | - | N/A | - | - | - | - |
| Multi-Category Expenses and Capital Expenditure (MCA) | ||||||||||||
| Output Expenses | 652,182 | 635,477 | 591,586 | 610,097 | 652,856 | 641,995 | 558,777 | - | 558,777 | 520,154 | 531,767 | 531,267 |
| Other Expenses | - | - | - | - | - | - | - | - | - | - | - | - |
| Capital Expenditure | - | - | - | - | - | - | N/A | - | - | - | - | - |
|
Total Appropriations |
5,696,818 | 5,663,654 | 5,706,657 | 6,720,952 | 9,469,828 | 9,116,267 | 1,112,601 | 13,487,600 | 14,600,201 | 15,171,004 | 15,995,431 | 16,997,431 |
|
Crown Revenue and Capital Receipts |
||||||||||||
| Tax Revenue | 63,401,693 | 69,222,866 | 72,142,690 | 77,879,653 | 76,103,000 | 76,103,000 | N/A | 71,586,000 | 71,586,000 | 76,831,000 | 87,071,000 | 93,009,000 |
| Non-Tax Revenue | 1,161,292 | 1,143,664 | 1,122,586 | 945,199 | 908,500 | 908,500 | N/A | 907,800 | 907,800 | 906,000 | 918,000 | 943,000 |
| Capital Receipts | 1,424,519 | 1,331,379 | 1,436,304 | 1,474,024 | 1,455,000 | 1,455,000 | N/A | 1,427,000 | 1,427,000 | 1,451,000 | 1,459,000 | 1,524,000 |
|
Total Crown Revenue and Capital Receipts |
65,987,504 | 71,697,909 | 74,701,580 | 80,298,876 | 78,466,500 | 78,466,500 | N/A | 73,920,800 | 73,920,800 | 79,188,000 | 89,448,000 | 95,476,000 |
Note - where restructuring of the vote has occurred then, to the extent practicable, prior years information has been restated as if the restructuring had occurred before the beginning of the period covered. In this instance Total Appropriations for the Budgeted and Estimated Actual year may not equal Total Annual Appropriations and Forecast Permanent Appropriations and Multi-Year Appropriations in the Details of Appropriations and Capital Injections.
Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring
There are no adjustments to the table due to Vote restructuring.
1.3 - Analysis of Significant Trends#
Departmental Output Expenses
Inland Revenue's departmental output expenses have increased from $11.050 million in 2015/16 to an estimated $16.161 million in 2019/20 and $14.248 million in 2020/21 mainly due to increased services provided to other agencies, such as staff on external secondments and accommodation rental recoveries. These increases have been mainly funded from other revenue.
Benefits or Related Expenses
Non-departmental benefits or related expenses include appropriations for KiwiSaver, Working for Families Tax Credits, Best Start tax credit, payroll subsidy, paid parental leave payments, child support payments to custodial persons and the Research and Development Tax Incentive.
Expenditure has increased from $3,550 million in 2015/16 to an estimated $5,700 million in 2023/24 due to growth, indexation changes and policy changes. Working for Families Tax Credits were substantially increased from 1 July 2018, the Best Start tax credit commenced from 1 July 2018, paid parental leave entitlements were extended from July 2018 and the Research and Development Tax Incentive was introduced from 1 April 2019.
Increases from 2019/20 are due to the steady increase in expenditure on Best Start tax credits and Research and Development Tax Incentives as these policies phase in.
Further increases over time in KiwiSaver tax credits are due to increases in the number of KiwiSaver contributing members and the average value of KiwiSaver contributions.
The in-work tax credit increases from 2020/21 due to the introduction of a new policy from 1 July 2020 which will increase the number of In-Work Tax Credit claims.
Working for Families Tax Credits and Best Start tax credit forecasts remain largely steady from 2020/21 until 2020/23 as a result of COVID-19 heightening the uncertainty around total family income and population growth.
Non-Departmental Borrowing Expenses
Non-departmental borrowing expenses include interest payments for the income equalisation, adverse event and environmental restoration account schemes. The adverse event scheme ceases in 2019/20.
Expenditure has increased from $8 million in 2015/16 to an estimated $12 million in 2023/24. The interest payable varies with the size of the deposits in these schemes, with deposits forecast to grow over time.
Non-Departmental Other Expenses
Non-departmental other expenses include bad debt write-offs, the initial fair value write-down on student loans, impairments relating to student loans, child support, general tax, KiwiSaver. Working for Families Tax Credits debt is also included. From April 2019, a new appropriation to enable the on-payment of employee and employer KiwiSaver contributions collected by Inland Revenue to KiwiSaver providers was included.
Expenditure has increased from $1,340 million in 2015/16 to an estimated $10,593 million in 2023/24. Expenditure in 2019/20 reflects an initial estimate of the impact of COVID-19. Further impacts of COVID-19 will be assessed for the Half Year Economic and Fiscal Update (HYEFU) 2020.
Departmental Other Expenses
Departmental other expenses include Inland Revenue's Transformation multi-year appropriation (MYA) covering 2017/18 to 2021/22. As this is a multi-year appropriation the timing of the expenditure may change between 2019/20, 2020/21 and 2021/22. The funding to complete the transformation programme is held in the 2020/21 and 2021/22 years along with the majority of the remaining contingency.
As the transformation programme implements releases 4 and 5 and hands over to operational teams, the funding for enduring costs will be transferred to the relevant Vote Revenue Departmental appropriations.
Departmental Capital Expenditure
Inland Revenue's capital expenditure has increased from $61.115 million in 2015/16 to an estimated $114.608 million in 2019/20 and $213.112 million in 2020/21 to reflect technology investment as a result of Inland Revenue's transformation programme.
Multi-Category Expenses and Capital Expenditure (MCA)
Inland Revenue's multi-category expenses and capital expenditure (MCA) have decreased from $652.182 million in 2015/16 to an estimated $641.995 million in 2019/20 and $558.777 million in 2020/21. The decrease is mainly due to the expected realisation of benefits from Inland Revenue's transformation programme.
The decrease in 2020/21 also includes the expiry of time limited funding of $36.586 million to support identification and management of risks and/or increased activity in the areas of aggressive tax planning, fraud, unfiled returns, collection of older debt, hidden economy and property compliance.
Tax Revenue
Non-departmental tax revenue incorporates unconsolidated source deductions (PAYE), other persons' tax, fringe benefit tax, corporate tax including company tax, other direct income tax, GST and other indirect tax administered by Inland Revenue. Tax revenue has increased from $63,403 million in 2015/16 to an estimated $93,009 million in 2023/24. Total tax revenue is forecast to decline through both 2019/20 and 2020/21, by 2.3% and 5.9% respectively, mainly owing to the COVID-19 lockdown through March/April 2020 and the economic recession that is expected to follow.
Over the remaining 3 years of the forecast period, total tax revenue is forecast to grow at an annual average rate of just over 9%, when the forecast economic recovery is expected to fuel above-average growth in tax revenue.
Source deduction revenue is forecast to increase by 6.1% in 2019/20, mainly owing to growth in wages and the associated fiscal drag. However, source deductions are then expected to decline by 4% in 2020/21, mainly owing to a forecast drop in the number of people employed. After 2020/21, source deduction revenue is forecast to grow by 7% per annum on average, as employment is expected to recover after the recession and wage growth is expected to accelerate through to 2023/24.
Net other persons tax revenue is expected to decline in each of the three years up to 2021/22, owing to the COVID-19 lockdown and subsequent recession. The 2022/23 year is expected to see other persons tax revenue bounce back sharply, mainly owing to a forecast spike in terminal tax revenue from the 2021/22 income tax year. Modest growth is forecast to continue into the 2023/24 year.
Corporate tax revenue is forecast to decline by nearly 20% in the 2019/20 year, mainly owing to the change in the income tax revenue-recognition method in April 2019 that caused a one-off boost to revenue in the 2018/19 year. A decline of a further 10% is forecast for the 2020/21 year, mainly owing to an expected decline in profits as a result of the COVID-19-induced recession.
Positive revenue growth is forecast to return in 2021/22, but is muted by the filing of 2020/21 income tax returns that are expected to include reduced tax revenue due to relief measures announced by the Government in March 2020, and an increased rate of tax loss utilisation from an assumed build-up of tax losses through 2020/21. Corporate tax revenue growth is forecast to accelerate through 2022/23 and 2023/24, as profit growth is expected to recover and tax loss utilisation begins to abate.
GST revenue is forecast to fall by 1.7% in 2019/20, mainly owing to a forecast fall in household consumption caused by the COVID-19 lockdown and subsequent weak economic conditions, and a fall in overseas tourist spending in New Zealand caused by border closure. GST is forecast to fall by a further 4.9% in 2020/21. Although household consumption is forecast to grow by 3.1%, this is more than offset by a further fall in spending by overseas tourists and a forecast rise in goods imports of 7%. Strong consumption growth, a resurgence in residential investment and recovery in the overseas tourist sector are all expected to boost annual-average growth in GST to nearly 10% through the remainder of the forecast period.
Deposit interest rates have been falling over the past year, and this is expected to push resident withholding tax (RWT) on interest income down by 7.8% in the 2019/20 year. With the Reserve Bank of New Zealand cutting the Official Cash Rate to 0.25%, RWT is forecast to decline in 2020/21 by about one-third, to around $1 billion. RWT is forecast to remain at this level until 2023/24.
Non-Tax Revenue
Non-departmental non-tax revenue incorporates child support collections from non-custodial parents, student loan interest unwind (interest income due to reversing the initial fair value write-down over the life of the loan), unclaimed monies, and interest and penalties on Working for Families Tax Credits debt. Non-tax revenue has decreased from $1,161 million in 2015/16 to an estimated $943 million in 2023/24. The decrease is mainly due to a change in accounting standards in 2018/19 affecting the way we calculate the interest unwind of the initial discount on student loans.
Capital Receipts
Non-departmental capital receipts include student loan capital repayments and deposits into the adverse event income equalisation, income equalisation, and environmental restoration account schemes. 2019/20 is the final year for the adverse event income equalisation scheme. Capital receipts have increased from $1,425 million in 2015/16 to an estimated $1,524 million in 2023/24. Growth over time is due to forecast student loan capital repayments.
Part 2 - Details of Departmental Appropriations#
2.1 - Departmental Output Expenses#
Policy Advice (M57)
Scope of Appropriation
Expenses and Revenue
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 11,199 | 11,199 | 10,306 |
| Revenue from the Crown | 11,182 | 11,182 | 10,298 |
| Revenue from Others | 17 | 17 | 8 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to provide policy advice to support decision-making by Ministers on tax and social policy matters, to protect and maintain the integrity of the tax system while ensuring that our tax system is as simple as possible and is internationally competitive.
How Performance will be Assessed and End of Year Reporting Requirements
| Assessment of Performance | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted Standard |
Estimated Actual |
Budget Standard |
|
|
Primary measures |
|||
|
Percentage of sampled reports that meet quality standards (see Note 1). |
80% | 80% | 80% |
|
Percentage of ministerial satisfaction for policy advice (see Note 2). |
90% | 90% | 90% |
Note 1 - The Department of the Prime Minister and Cabinet-led Policy Project launched a refreshed Policy Quality Framework in July 2019. Inland Revenue is using the refreshed framework as the basis for assessing the quality of its policy advice papers.
Note 2 - The Department of the Prime Minister and Cabinet-led Policy Project launched a revised survey for agencies to use to assess ministers' satisfaction with the policy service. Inland Revenue implemented the revised survey for its annual report for 2018/19.
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2021.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
|
Current Government |
||||||
| Budget 2018 Tax Compliance Activity - Funding to Collect Additional Revenue | 2018/19 | 950 | 700 | 400 | - | - |
Services to Other Agencies RDA (M57)
Scope of Appropriation
Expenses and Revenue
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 5,662 | 4,962 | 3,942 |
| Revenue from the Crown | - | - | - |
| Revenue from Others | 5,662 | 4,962 | 3,942 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to provide support services to other government agencies, such as the provision of a hosted financial management information system and shared financial transactional services.
How Performance will be Assessed and End of Year Reporting Requirements
| Assessment of Performance | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted Standard |
Estimated Actual |
Budget Standard |
|
|
Primary measures |
|||
|
Percentage of satisfaction of the Department of Internal Affairs for services provided. |
75% | 75% | 75% |
|
Percentage of satisfaction of the New Zealand Productivity Commission for services provided. |
90% | 90% | 90% |
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2021.
Reasons for Change in Appropriation
The decrease in this appropriation from 2019/20 to 2020/21 is mainly due to a fiscally neutral adjustment of $1.700 million in 2019/20 for revenue from third parties for Inland Revenue staff on external secondments.
2.2 - Departmental Other Expenses#
Transformation (M57)
Scope of Appropriation and Expenses
| Type, Title, Scope and Period of Appropriations | Appropriations, Adjustments and Use | $000 |
|---|---|---|
|
Transformation (M57) This appropriation is limited to the design and implementation of a modern system for tax revenue and social policy administered by Inland Revenue.Commences: 01 July 2017 Expires: 30 June 2022 |
Original Appropriation | 1,112,607 |
| Adjustments to 2018/19 | 10,154 | |
| Adjustments for 2019/20 | (46,946) | |
| Adjusted Appropriation | 1,075,815 | |
| Actual to 2018/19 Year End | 400,132 | |
| Estimated Actual for 2019/20 | 205,893 | |
| Estimate for 2020/21 | 326,464 | |
| Estimated Appropriation Remaining | 143,326 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to design and implement a modern system for tax revenue and social policy administered by Inland Revenue that meets government priorities and responds to customers' changing expectations. This will lead to the more efficient collection of taxes and distribution of entitlements. It will also have wider benefits for New Zealand, including reduced compliance and operating costs, as well as the more agile delivery of policy changes in the future.
How Performance will be Assessed and End of Year Reporting Requirements
| Assessment of Performance | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted Standard |
Estimated Actual |
Budget Standard |
|
Primary measures# |
|||
|
KiwiSaver is administered in START |
By 30 June 2020 | On track | Not applicable |
|
Student Loan Scheme repayments are administered in START |
By 30 June 2020 | On track | Not applicable |
|
Child support is administered in START. |
Not applicable | Not applicable | By 30 June 2021 |
|
Paid parental leave is administered in START. |
Not applicable | Not applicable | By 30 June 2021 |
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2021.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
|
Previous Government |
||||||
| Business Transformation | 2015/16 | 156,000 | 70,000 | 64,000 | 45,000 | 36,000 |
2.3 - Departmental Capital Expenditure and Capital Injections#
Inland Revenue Department - Capital Expenditure PLA (M57)
Scope of Appropriation
Capital Expenditure
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Forests/Agricultural | - | - | - |
| Land | - | - | - |
| Property, Plant and Equipment | 8,000 | 8,000 | 9,000 |
| Intangibles | 106,608 | 106,608 | 204,112 |
| Other | - | - | - |
|
Total Appropriation |
114,608 | 114,608 | 213,112 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to invest in the renewal, upgrade and redesign of assets that support the delivery of the department's services. This includes the capital investment required for the implementation of Inland Revenue's business transformation programme.
How Performance will be Assessed and End of Year Reporting Requirements
Expenditure supports the delivery of the department's performance measures in accordance with the department's capital asset management priorities for 2020/21 which are:
- implementation of business transformation (approximately 90%), and
- maintenance and improvement of business infrastructure including technology replacements and accommodation fit-outs (approximately 10%).
Transformation spending will be assessed against the performance measures agreed for the Transformation appropriation.
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2021.
Reasons for Change in Appropriation
Capital funding in 2020/21 largely reflects spending to complete the business transformation programme and the remaining capital contingency.
Capital Injections and Movements in Departmental Net Assets
Inland Revenue Department
| Details of Net Asset Schedule | 2019/20 Estimated Actual $000 |
2020/21 Projected $000 |
Explanation of Projected Movements in 2020/21 |
|---|---|---|---|
| Opening Balance | 382,321 | 450,694 | |
| Capital Injections | 103,000 | 154,168 | Capital injections have been adjusted to align with the updated capital expenditure forecast for the implementation of business transformation Releases 4 and 5. In addition to forecast capital expenditure, 2020/21 contains the majority of the remaining capital contingency for the transformation programme. |
| Capital Withdrawals | (34,627) | - | Contingency capital funding for business transformation of $34 million has been returned to the Crown. The updated risk modelling shows that Inland Revenue will be able to deliver transformation without the need to access the ministerial contingency. Capital withdrawal of $627,000 was for the business tax package initiative. |
| Surplus to be Retained (Deficit Incurred) | - | - | |
| Other Movements | - | - | |
|
Closing Balance |
450,694 | 604,862 |
Part 3 - Details of Non-Departmental Appropriations#
3.2 - Non-Departmental Benefits or Related Expenses#
Best Start Tax Credit PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 188,000 | 188,000 | 336,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for payments to all families with a dependent child in the first year of the child's life to help with day-to-day living costs. Payments continue for low and middle income families until the dependent child turns three years old.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for Best Start tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Families Package | 2018/19 | 231,000 | 373,000 | 451,000 | 451,000 | 451,000 |
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is because the Best Start tax credit commenced in July 2018 and will continue to grow for the first three years as the policy phases in. Thereafter, growth will reflect demographic changes, but will be tempered by the abatement mechanism as incomes grow.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Subpart MG of the Income Tax Act 2007 | Sets out the entitlement and calculation of the Best Start tax credit. |
Child Support Payments PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 295,000 | 295,000 | 272,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for the transfer of child support payments from non-custodial parents to custodial persons.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for child support payments to custodial persons under the Child Support Act 1991. Performance information is provided under the Services for Customers Multi-Category Appropriation relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements category.
Reasons for Change in Appropriation
The decrease in this appropriation for 2020/21 is the result of expected declining labour market conditions such as lower aggregate employee compensation, lower wage growth and higher unemployment due to the COVID-19 event. It is forecast that less will be collected in child support payments overall from non-custodial parents and that the Crown will retain a larger share of amounts collected in order to offset any welfare payments to custodial persons.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Section 141 of the Child Support Act 1991 | On payment of money received by the Commissioner by way of child support to qualifying custodians, if the qualifying custodian of the child is not a recipient of a social security benefit. |
Child Tax Credit PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 100 | 100 | 100 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for payments to families with dependent children aged 18 or younger to help with day-to-day living costs.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for child tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Reasons for Change in Appropriation
The child tax credit was replaced by the in-work tax credit in April 2006 and entitlements to the credit will eventually cease. The forecast has been maintained at 2019/20 levels to ensure an appropriation remains available for the tail end of claims.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Subpart MZ of the Income Tax 2007 | Sets out the entitlement for and calculation of the child tax credit |
Family Tax Credit PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 2,144,000 | 2,144,000 | 2,139,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for payments to low to middle income families with dependent children aged 18 or younger to help with day-to-day living costs.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for family tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Families Package | 2018/19 | 530,000 | 520,000 | 510,000 | 510,000 | 510,000 |
| Previous Government | ||||||
| Budget 2017 Family Incomes Package | 2017/18 | 316,000 | 308,000 | 308,000 | 308,000 | 308,000 |
| Package for children living in material hardship | 2015/16 | (28,550) | (28,550) | (28,550) | (28,550) | (28,550) |
Reasons for Change in Appropriation
The appropriation has remained largely unchanged for 2020/21 as a result of COVID-19 heightening the uncertainty around total family income and population growth. The next indexation adjustment has been delayed from April 2022 to April 2023 with an increase of 5.32% to the entitlement. The tax credit is sensitive to incomes, as entitlements decrease through abatement as incomes grow.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Subpart MD 3 of the income Tax Act 2007 | Sets out entitlement for and calculation of the family tax credit. |
In-Work Tax Credit PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 603,000 | 603,000 | 631,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for payments to families who work the required hours each week and have dependent children aged 18 or younger to help with day-to-day living costs.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for in-work tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| In-Work Tax Credit removing the hours test | 2020/21 | - | 32,000 | 32,000 | 32,000 | 32,000 |
| Previous Government | ||||||
| Budget 2017 Family Incomes Package | 2017/18 | 2,000 | 2,000 | 2,000 | 2,000 | 2,000 |
| Package for children living in material hardship | 2015/16 | 95,000 | 95,000 | 95,000 | 95,000 | 95,000 |
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is due to the introduction of a new policy from 1 July 2020. This policy removes the hours worked test for eligibility which will increase the number of In-Work Tax Credit claims.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Sections MD 4-10 of the Income Tax Act 2007 | Sets out the entitlement for and calculation of the in-work tax credit |
KiwiSaver: Interest (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 9,000 | 7,000 | 5,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for interest payments to members on KiwiSaver contributions while they are held with Inland Revenue. Inland Revenue is required to hold members' contributions for three months from the date of the first contribution before transferring it to their KiwiSaver providers.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for KiwiSaver interest payments under the KiwiSaver Act 2006. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Reasons for Change in Appropriation
The decrease in this appropriation for 2020/21 is due to forecast lower interest rates and a reduction in the holding time for KiwiSaver contributions resulting in less interest payable once the administration of KiwiSaver is able to be done in the new tax system (expected to be from April 2020).
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Section 84-91 of the KiwiSaver Act 2006 | Interest payable by Inland Revenue on KiwiSaver member contributions while they are being held by Inland revenue prior to being forwarded to KiwiSaver scheme providers. |
KiwiSaver: Tax Credit (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 912,000 | 902,000 | 930,000 |
What is Intended to be Achieved with this Appropriation
This appropriation encourages participation in the KiwiSaver scheme by providing for an annual payment to contributing members aged 18 or over who meet the eligibility criteria.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for KiwiSaver tax credit payments under the KiwiSaver Act 2006. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is due to an increase in the total number of contributing members. The increase also reflects an increase in average entitlements as a result of income growth of members who were previously contributing less than the threshold for the maximum KiwiSaver tax credit entitlement.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Part MK 1-8 of the Income Tax Act 2007 | Provides a tax credit for members up to a cap of $10 per week. |
Minimum Family Tax Credit PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 20,000 | 20,000 | 22,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for payments to families with dependent children aged 18 or younger to ensure that the annual income after tax of a family does not fall below $26,156 where at least one parent is working.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for minimum family tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Incomes for people receiving benefits | 2019/20 | 625 | 2,500 | 2,500 | 2,500 | 2,500 |
| Families Package | 2018/19 | 1,300 | 1,300 | 1,300 | 1,300 | 1,300 |
| Previous Government | ||||||
| Package for children living in material hardship | 2015/16 | 1,800 | 1,800 | 1,800 | 1,800 | 1,800 |
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is due to a policy change that increased welfare benefits from April 2020 with flow-on impacts to the minimum family tax credit from the 2020/21 income year.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Subpart ME of the Income Tax Act 2007 | Sets out the entitlement for and calculation of the minimum family tax credit. |
Paid Parental Leave Payments (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 430,000 | 425,000 | 455,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for payments to eligible parents and adoptive parents when they take parental leave from their employment to care for their new-born or adopted child (under the age of six). These payments provide employment protected leave and compensate for the loss of income.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for paid parental leave payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Extending paid parental leave to 26 weeks | 2018/19 | 68,700 | 142,700 | 148,400 | 148,400 | 148,400 |
| Previous Government | ||||||
| Extending the duration of parental leave payments of preterm babies | 2015/16 | 3,400 | 3,400 | 3,400 | 3,400 | 3,400 |
Reasons for Change in Appropriation
The increase in this appropriation for 2019/20 is due to an increase in claims as a result of increased employment. There is also an increase in the average entitlement amount in July each year to reflect wage growth.
The increase in this appropriation for 2020/21 is mainly due to the paid parental leave entitlement increasing from 22 to 26 weeks from 1 July 2020. In addition, the indexation used for the forecast is based on an annual rate of wage inflation measured in the March 2020 quarter, reflecting a relatively strong labour market, however, the forecast has also been adjusted for some reduction in eligibility as result of the recent declining employment outlook as a result of COVID-19.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Part 7A of the Parental Leave and Employment Protection Act 1987 | Establishes the calculation for the payment of paid parental leave payments. |
Research, Science and Innovation: R&D Tax Incentive (M84)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 225,000 | 225,000 | 281,000 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to incentivise businesses to increase their spending on R&D through the provision of a tax credit.
How Performance will be Assessed and End of Year Reporting Requirements
Performance information for this appropriation will be reported by the Minister of Research, Science and Innovation in the Vote Revenue Non-Departmental Appropriations report.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Research and Development Tax Incentive | 2018/19 | 158,000 | 255,000 | 454,000 | 454,000 | 454,000 |
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is due to updated assumptions on how the phasing out of the Growth Grant Scheme impacts on the tax credit.
Conditions on Use of Appropriation
| Reference | Conditions |
|---|---|
| Subpart LY of the Income Tax Act 2007 | Sets out the entitlement for and calculation of the research and development tax credit. |
3.3 - Non-Departmental Borrowing Expenses#
Environmental Restoration Account Interest PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 1,500 | 1,500 | 1,500 |
What is Intended to be Achieved with this Appropriation
This appropriation provides interest payments on deposits held in an environmental restoration account. The environmental restoration account allows businesses to set aside money to cover restoration costs for monitoring, avoiding, remedying or mitigating the detrimental environmental effects which may occur in later years.
Income Equalisation Interest PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 6,000 | 6,000 | 10,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides interest payments on deposits held in the income equalisation scheme. This scheme allows taxpayers in the farming, fishing, and forestry industries to make payments during the year to equalise income between different income years.
Reasons for Change in Appropriation
The scheme is demand-driven, and the interest payable reflects scheme usage. The increase in this appropriation for 2020/21 allows for potential increased usage of the scheme.
3.4 - Non-Departmental Other Expenses#
Impairment of Debt and Debt Write-Offs (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 1,270,000 | 970,000 | 880,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for the write-off of the Crown debt and for recognising an impairment to reflect the recoverable value of the Crown debt as at the end of a financial year, relating to general tax, KiwiSaver and Working for Families Tax Credits.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the impairment of debt and debt write-offs. Performance information relating to this expenditure is provided under the Services for Customers Multi-Category Appropriation under the Management of Debt and Outstanding Returns category.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Increasing the threshold for provisional tax | 2020/21 | - | (2,000) | (2,000) | (2,000) | (2,000) |
| Tax compliance activity - additional revenue | 2018/19 | 15,000 | 15,000 | 15,000 | - | - |
| Previous Government | ||||||
| Revenue investment continuation | 2017/18 | (6,525) | - | - | - | - |
| Small business tax package | 2016/17 | (78,000) | (100,280) | (119,590) | (132,010) | (132,010) |
| Revenue investment | 2015/16 | 11,601 | - | - | - | - |
Reasons for Change in Appropriation
The final 2019/20 forecast includes a contingency to cover an initial assessment of COVID-19 related impacts on debt and debt collectability and to prevent any unauthorised expenditure as this appropriation does not have a permanent legislative authority. The decrease in this appropriation for 2020/21 is due to forecast changes in the level of overdue debt, impairment and write-offs. The forecast for outyears does not include an assessment for COVID-19 as it is too early to assess the impacts for outyears. A debt data model that incorporates the impacts of COVID-19 will be completed for the Half Year Economic Budget Update (HYEFU) 2020.
Initial Fair Value Write-Down Relating to Student Loans (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 510,000 | 490,000 | 558,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for incurring the expense relating to reductions in the nominal value of new student loan lending to reflect the present value of that lending.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the initial fair value write-down of student loans. Performance information relating to this expenditure is available to the House of Representatives in the Student Loan Scheme Annual Report 2018.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
| Current Government | ||||||
| Home-based early childhood education review | 2018/19 | 68 | 197 | 231 | 88 | 88 |
| First year fees-free in 2018 | 2017/18 | (71,951) | (68,526) | (72,383) | (72,383) | (72,383) |
| Increase student allowance and living costs loans by $50 | 2017/18 | 59,106 | 61,271 | 63,302 | 63,302 | 63,302 |
| Tertiary Education Annual Maximum Fee Movement | 2017/18 | 2,107 | 2,270 | 2,329 | 2,329 | 2,329 |
| Previous Government | ||||||
| Annual maximum fee movement for 2017 and 2018 | 2016/17 | 3,380 | 3,380 | 3,380 | 3,380 | 3,380 |
| Response to the Syrian refugee crisis: implementation | 2016/17 | 12 | - | - | - | - |
| Delivering support to graduate-entry students affected by the 7 EFTS limit to complete long undergraduate programmes | 2015/16 | 627 | - | - | - | - |
| Investing to increase the number of engineering graduates | 2015/16 | 371 | 990 | 1,224 | 1,224 | 1,224 |
| Maintain the student allowance parental income threshold | 2015/16 | 2,520 | 2,520 | 2,520 | 2,520 | 2,520 |
| Set the annual maximum fee movement to 3% for 2016 | 2015/16 | (5,363) | (5,363) | (5,363) | (5,363) | (5,363) |
| Supporting better pubic services and business growth within Vote Tertiary Education | 2015/16 | 2,013 | 2,013 | 2,013 | 2,013 | 2,013 |
Reasons for Change in Appropriation
The increase in this appropriation for 2020/21 is due to increases in forecast lending to students.
KiwiSaver: Employee and Employer Contributions PLA (M57)
Scope of Appropriation
Expenses
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
| Total Appropriation | 1,856,000 | 1,856,000 | 6,967,000 |
What is Intended to be Achieved with this Appropriation
This permanent appropriation provides for the on-payment of employee and employer KiwiSaver contributions collected by Inland Revenue to KiwiSaver Scheme providers.
How Performance will be Assessed and End of Year Reporting Requirements
An exemption is being sought under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the on-payment of employee and employer KiwiSaver contributions collected by Inland Revenue to KiwiSaver Scheme providers. Performance information relating to the administration of the payment is provided under the Services for Customers Multi-Category Appropriation under the Services to Process Obligations and Entitlements category.
Reasons for Change in Appropriation
This appropriation commenced 1 April 2020. The increase in this appropriation for 2020/21 reflects the first full year of activity.
Part 4 - Details of Multi-Category Expenses and Capital Expenditure#
Multi-Category Expenses and Capital Expenditure#
Services for Customers (M57)
Overarching Purpose Statement
Scope of Appropriation
Departmental Output Expenses
Investigations
This category is limited to Inland Revenue undertaking investigation, audit and litigation activities.
Management of Debt and Unfiled Returns
This category is limited to activities to prevent returns and debt becoming overdue, and to collect unfiled returns and overdue payments, whether for the Crown, other agencies or external parties.
Services to Ministers and to inform the public about entitlements and meeting obligations
This category is limited to the provision of services to help Ministers fulfil their responsibilities to Parliament and the New Zealand public, other than policy decision-making responsibilities, and to provide information and assistance to the public to make them aware of their obligations and entitlements.
Services to Process Obligations and Entitlements
This category is limited to the registration, assessment and processing of tax obligations and other entitlements, including associated review and Crown accounting activities, and the collection and sharing of related information with other agencies.
Expenses, Revenue and Capital Expenditure
| 2019/20 | 2020/21 | ||
|---|---|---|---|
| Final Budgeted $000 |
Estimated Actual $000 |
Budget $000 |
|
|
Total Appropriation |
652,856 | 641,995 | 558,777 |
|
Departmental Output Expenses |
|||
| Investigations | 123,110 | 121,052 | 112,201 |
| Management of Debt and Unfiled Returns | 93,180 | 91,616 | 82,620 |
| Services to Ministers and to inform the public about entitlements and meeting obligations | 276,502 | 271,991 | 224,410 |
| Services to Process Obligations and Entitlements | 160,064 | 157,336 | 139,546 |
|
Funding for Departmental Output Expenses |
|||
|
Revenue from the Crown |
631,467 | 631,467 | 541,112 |
| Investigations | 122,754 | 122,754 | 111,965 |
| Management of Debt and Unfiled Returns | 91,106 | 91,106 | 80,662 |
| Services to Ministers and to inform the public about entitlements and meeting obligations | 275,139 | 275,139 | 223,224 |
| Services to Process Obligations and Entitlements | 142,468 | 142,468 | 125,261 |
|
Revenue from Others |
21,389 | 21,389 | 17,665 |
| Investigations | 356 | 356 | 236 |
| Management of Debt and Unfiled Returns | 2,074 | 2,074 | 1,958 |
| Services to Ministers and to inform the public about entitlements and meeting obligations | 1,363 | 1,363 | 1,186 |
| Services to Process Obligations and Entitlements | 17,596 | 17,596 | 14,285 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to ensure customers find it easy to meet their tax and social policy obligations and receive the payments they are entitled to.
How Performance will be Assessed for this Appropriation
| Assessment of Performance | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted Standard |
Estimated Actual |
Budget Standard |
|
Primary measures |
|||
|
Percentage of customers satisfied with the overall quality of service delivery from Inland Revenue (see Note 1). |
90% | 84% | 90% |
|
Percentage of customers who feel Inland Revenue makes it easy for people to get it right (see Note 1). |
80% | 81% | 80% |
What is Intended to be Achieved with each Category and How Performance will be Assessed
| Assessment of Performance | 2019/20 | 2020/21 | |
|---|---|---|---|
| Final Budgeted Standard |
Estimated Actual |
Budget Standard |
|
|
Departmental Output Expenses |
|||
|
Investigations |
|||
Primary measures |
|||
|
Percentage of customers whose compliance behaviour improves after receiving an audit intervention (see Note 2). |
85% | Not available | 85% |
|
Discrepancy identified for every output dollar spent. |
$7.00 | $7.00 | $7.00 |
|
Percentage of litigation judgments found in favour of the Commissioner. |
75% | 80% | 75% |
Supporting measures |
|||
|
Percentage of audited customers who are satisfied with their experience (see Note 2). |
75% | 66% | 75% |
|
Management of Debt and Unfiled Returns |
|||
Primary measures |
|||
|
Percentage of returns filed by customers on time. |
85% | 86% | 85% |
|
Value of assessed revenue for every unfiled return dollar spent. |
$45.00 | $35.00 | $40.00 |
|
Percentage of tax payments made by customers on time. |
85% | 86% | 85% |
|
Cash collected for every debt dollar spent. |
$30.00 | $48.70 | $40.00 |
|
Percentage of child support assessments paid on time. |
70% | 70% | 70% |
Supporting measures |
|||
|
Average cost of finalising an unfiled return. |
$18.00-$20.00 | $37.93 | $30.00 or less |
|
Percentage of unfiled returns that are finalised within six months. |
70% | 46% | 60% |
|
Percentage of collectable debt value over two years old. |
50% or less | 45% | 50% or less |
|
Percentage of new customer debt resolved within six months. |
80% | 75% | 80% |
|
Percentage of New Zealand liable parent child support debt cases resolved within 12 months. |
75% | 79% | 75% |
|
Services to Ministers and to inform the public about entitlements and meeting obligations |
|||
Primary measures |
|||
|
Percentage of customers who perceive that Inland Revenue does enough to inform them of their rights and obligations (see Note 1). |
85% | 85% | 85% |
|
Percentage of customers who perceive that resolving issues with Inland Revenue requires low effort (see Note 1). |
80% | 76% | 80% |
Supporting measures |
|||
|
Average cost of a customer-initiated contact. |
$35.00 or less | $36.36 | $35.00 or less |
|
Average speed to answer telephone calls. |
4 minutes 30 seconds or less | 6 minutes and 28 seconds | 4 minutes 30 seconds or less |
|
Percentage of all rulings reports, adjudication reports and public items that meet the applicable purpose, logic, alternatives, consultation, and practicality standards. |
100% | 100% | 100% |
|
Number of published or finalised public items that give the Commissioner's interpretation of the law. |
25 | 26 | 25 |
|
Percentage of public items (including relevant public consultation), completed within 18 months of allocation. |
85% | 92% | 85% |
|
Percentage of adjudication cases completed within 10 weeks of receipt. |
90% | 100% | 90% |
|
Percentage of taxpayer ruling applications that have a draft ruling completed within 10 weeks of receipt. |
90% | 100% | 90% |
|
Percentage of non-qualifying ruling applications that have a draft ruling completed within six months of receipt. |
90% | 99% | 90% |
|
Percentage of submissions by the applicant on any draft ruling responded to within one month of receipt. |
90% | 100% | 90% |
|
Percentage of short-process rulings that have a draft ruling completed within six weeks of receipt. |
N/A | N/A | 90% |
|
Services to Process Obligations and Entitlements |
|||
Primary measures |
|||
|
Percentage of social policy and tax registrations processed within five working days. |
85% | 91% | 85% |
|
Percentage of income tax disbursements resulting from a return issued within five weeks. |
85% | 89% | 85% |
|
Percentage of GST disbursements issued within four weeks (see Note 3). |
95% | 96% | 95% |
Supporting measures |
|||
|
Percentage of income tax returns finalised within three weeks. |
90% | 96% | 95% |
|
Percentage of GST returns finalised within three weeks. |
98% | 100% | 98% |
|
Percentage of employment information finalised within four weeks. |
95% | 98% | N/A |
|
Average cost of processing income tax returns, GST returns and employment information. |
$4.00 or less | $3.04 | $3.50 or less |
|
Percentage of tax credit claim payments made within three weeks. |
90% | Not available | N/A |
|
Percentage of donation tax credit claims processed within three weeks. |
N/A | N/A | 70% |
|
Percentage of Working for Families Tax Credit (WfFTC) payments made on the first regular payment date following an application. |
95% | 98% | 95% |
|
Percentage of paid parental leave payments issued to customers on the first pay day following the agreed date of entitlement. |
97% | 99% | 97% |
|
Percentage of child support administrative review decisions issued within seven weeks. |
90% | 95% | 90% |
|
Percentage of child support assessments issued within two weeks. |
80% | 85% | 80% |
Note 1 - Actual performance measured using a sample of the customer population.
Note 2 - Actual performance measured using a sample of audit cases.
Note 3 - Section 46 of the Goods and Services Tax Act 1985 requires refunds to be issued within 15 working days unless selected for a screening or investigation. The four weeks measure includes additional time for screening or investigation.
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2021.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact |
2019/20 Final Budgeted $000 |
2020/21 Budget $000 |
2021/22 Estimated $000 |
2022/23 Estimated $000 |
2023/24 Estimated $000 |
|---|---|---|---|---|---|---|
|
Investigations |
||||||
|
Current Government |
||||||
| Budget 2018 Research and Development Tax Credit Implementation | 2018/19 | 150 | 80 | 80 | 80 | 80 |
|
Previous Government |
||||||
| Revenue investment continuation | 2017/18 | 9,584 | - | - | - | - |
|
Management of Debt and Unfiled Returns |
||||||
|
Current Government |
||||||
| Budget 2018 Tax Compliance Activity - Funding to Collect Additional Revenue | 2018/19 | 5,850 | 5,900 | 5,900 | - | - |
|
Previous Government |
||||||
| Revenue investment continuation | 2017/18 | 10,400 | - | - | - | - |
|
Services to Inform the public About Entitlements and Meeting Obligations |
||||||
|
Current Government |
||||||
| Research and Development (R&D) Tax Incentive | 2019/20 | 3,124 | 3,142 | - | - | - |
| Budget 2018 Research and Development Tax Credit Implementation | 2018/19 | 600 | 320 | 320 | 320 | 320 |
| Families Package Implementation | 2018/19 | 410 | 350 | 350 | 350 | 350 |
|
Services to Process Obligations and Entitlements |
||||||
|
Current Government |
||||||
| Research and Development (R&D) Tax Incentive | 2019/20 | 2,046 | 2,058 | - | - | - |
| Budget 2018 Research and Development Tax Credit Implementation | 2018/19 | 750 | 400 | 400 | 400 | 400 |
| Families Package Implementation | 2018/19 | 840 | 710 | 710 | 710 | 710 |
|
Previous Government |
||||||
| Automatic Exchange of Information | 2016/17 | 2,700 | 2,400 | 2,400 | 2,400 | 2,400 |
Reasons for Change in Appropriation
The decrease of $94.079 million from 2019/20 to 2020/21 reflects the realisation of expected benefits from Inland Revenue's transformation programme. The decrease also includes the expiry of time limited funding of $36.586 million to support identification and management of risks and/or increased activity in the areas of aggressive tax planning, fraud, unfiled returns, collection of older debt, hidden economy and property compliance.