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Estimates of appropriations

Vote Revenue - Finance and Government Administration Sector - Estimates 2020/21

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
Tax Revenue
The Trends in non-departmental tax revenue chart is a Bar chart
Source: Inland 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
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.
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
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.
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
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.
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
This appropriation is limited to Best Start Tax Credits made to eligible recipients in accordance with section 185 of the Tax Administration Act 1994.
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
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).
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
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).
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
Family Support payments made to beneficiaries and non-beneficiaries during the year (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
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
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).
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
To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006.
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
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.
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
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).
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
This appropriation is limited to Paid Parental Leave Payments made to parents in accordance with the Parental Leave and Employment Protection Act 1987.
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
This appropriation is limited to providing an R&D tax credit to eligible R&D performing businesses.
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
This appropriation is limited to interest on Environmental Restoration accounts, authorised by section 65ZH(1) of the Public Finance Act 1989.
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
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.
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
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.
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
This appropriation is limited to the initial fair value write-down of student loans.
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
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.
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
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.
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.

Last updated: 
Friday, 16 October 2020