Formats and related files
APPROPRIATION MINISTER(S): Minister of Revenue (M57)
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 2017/18 financial year covering the following:
- a total of just under $666 million for departmental output expenses including investigations, management of debt and outstanding returns, policy advice, services to inform the public about entitlements and meeting obligations, services to other agencies, and services to process obligations and entitlements
- a total of just under $222 million for departmental capital expenditure
- a total of just under $3,871 million for non-departmental 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 $12 million for non-departmental borrowing expenses, and
- a total of $1,576 million for non-departmental other expenses, mainly for the impairment and write-off of debt.
The Minister of Revenue is also responsible for a total of just under $1,113 million for multi-year departmental other expenses for transformation.
The Minister of Revenue is also responsible for a capital injection of over $181 million to the Inland Revenue Department.
The Minister of Revenue is also responsible for Crown revenue and receipts in the Vote for the 2017/18 financial year covering the following:
- a total forecast of $70,574 million for tax revenue
- a total forecast of just under $1,153 million for non-tax revenue, and
- a total forecast of $1,427 million for capital receipts.
Details of these appropriations are set out in Parts 2-4.
Details of Appropriations and Capital Injections#
Annual and Permanent Appropriations#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Titles and Scopes of Appropriations by Appropriation Type | Final Budgeted $000 | Estimated Actual $000 | Budget $000 |
Departmental Output Expenses | |||
Investigations (M57)This appropriation is limited to undertaking investigation, audit and litigation activities administered by Inland Revenue. | 173,060 | 170,677 | 173,657 |
Management of Debt and Outstanding Returns (M57)This appropriation is limited to activities to prevent returns becoming outstanding and debt becoming overdue, and to collect outstanding returns and overdue payments, whether for the Crown, other agencies or external parties. | 148,286 | 146,467 | 148,301 |
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. | 9,504 | 9,097 | 9,560 |
Services to Inform the Public About Entitlements and Meeting Obligations (M57)This appropriation is limited to providing information and assistance to the public to make them aware of their obligations and entitlements. This also includes the provision of services to help Ministers fulfil their responsibilities to Parliament and the New Zealand public, other than policy decision-making responsibilities. | 212,145 | 209,871 | 216,454 |
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. | 3,060 | 2,460 | 3,060 |
Services to Process Obligations and Entitlements (M57)This appropriation is limited to both 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. | 108,859 | 107,102 | 114,502 |
Total Departmental Output Expenses | 654,914 | 645,674 | 665,534 |
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. | 159,730 | 130,930 | - |
Total Departmental Other Expenses | 159,730 | 130,930 | - |
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. | 129,263 | 106,000 | 221,600 |
Total Departmental Capital Expenditure | 129,263 | 106,000 | 221,600 |
Benefits or Related Expenses | |||
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). | 279,000 | 279,000 | 291,000 |
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). | 900 | 900 | 900 |
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). | 1,763,000 | 1,763,000 | 1,823,000 |
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). | 566,000 | 566,000 | 561,000 |
KiwiSaver: Interest (M57)To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006. | 15,000 | 13,000 | 12,000 |
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. | 793,000 | 768,000 | 798,000 |
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). | 13,000 | 13,000 | 12,000 |
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. | 287,000 | 282,000 | 338,000 |
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. | 30,000 | 30,000 | 29,000 |
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. | 5,900 | 5,900 | 5,900 |
Total Benefits or Related Expenses | 3,752,800 | 3,720,800 | 3,870,800 |
Non-Departmental Borrowing Expenses | |||
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. | 40 | 40 | 10 |
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. | 2,000 | 2,000 | 2,000 |
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. | 8,000 | 8,000 | 10,000 |
Total Non-Departmental Borrowing Expenses | 10,040 | 10,040 | 12,010 |
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. | 950,000 | 750,000 | 800,000 |
Impairment of Debt Relating to Student Loans (M57)This appropriation is limited to the impairment of student loan debt. | 143,000 | 43,000 | 100,000 |
Initial Fair Value Write-Down Relating to Student Loans (M57)This appropriation is limited to the initial fair value write-down of student loans. | 689,000 | 670,000 | 676,000 |
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 | 1,787,000 | 1,463,000 | 1,576,000 |
Total Annual and Permanent Appropriations | 6,493,747 | 6,076,444 | 6,345,944 |
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 2021 | Original Appropriation | 1,112,607 |
| Adjustments to 2015/16 | - | |
| Adjustments for 2016/17 | - | |
| Adjusted Appropriation | 1,112,607 | |
| Actual to 2015/16 Year End | - | |
| Estimated Actual for 2016/17 | - | |
| Estimated Actual for 2017/18 | 382,372 | |
| Estimated Appropriation Remaining | 730,235 |
Total Annual and Permanent Appropriations and Multi-Year Appropriation Forecasts#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Annual and Permanent Appropriations | 6,493,747 | 6,076,444 | 6,345,944 |
| Total MYA Departmental Other Expenses Forecasts | - | - | 382,372 |
Total Annual and Permanent Appropriations and Multi-Year Appropriation Forecasts | 6,493,747 | 6,076,444 | 6,728,316 |
Capital Injection Authorisations#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Inland Revenue Department - Capital Injection (M57) | 58,110 | 58,110 | 181,600 |
Supporting Information#
Part 1 - Vote as a Whole#
1.1 - New Policy Initiatives
| Policy Initiative | Appropriation | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Automatic Exchange of Information | Services to Process Obligations and EntitlementsDepartmental Other Expenses | 1,680 | 2,620 | 3,300 | 2,700 | 2,400 |
Departmental Capital InjectionsDepartmental Net Assets | 3,000 | 5,800 | - | - | - | |
| Budget 2017 Family Incomes Package | Family Tax Credit PLA Non-Departmental Benefits or Related Expenses | - | 97,000 | 371,000 | 316,000 | 308,000 |
| In-Work Tax Credit PLA Non-Departmental Benefits or Related Expenses | - | - | 2,000 | 2,000 | 2,000 | |
| Business tax package | InvestigationsDepartmental Output Expenses | 270 | 150 | 100 | - | - |
Management of Debt and Outstanding ReturnsDepartmental Output Expenses | 1,620 | 890 | 630 | - | - | |
Services to Inform the Public About Entitlements and Meeting ObligationsDepartmental Output Expenses | 770 | 420 | 310 | - | - | |
Departmental Capital InjectionsDepartmental Net Assets | 1,110 | - | - | - | - | |
| Making Tax Simpler: Better Administration of PAYE and GST | Payroll Subsidy PLA Non-Departmental Benefits or Related Expenses | - | (1,700) | (7,300) | (8,100) | (8,100) |
| Total Initiatives | 8,450 | 105,180 | 370,040 | 312,600 | 304,300 |
1.2 - Trends in the Vote#
Summary of Financial Activity#
| 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2020/21 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | 628,213 | 671,174 | 667,100 | 663,232 | 654,914 | 645,674 | 665,534 | - | 665,534 | 638,918 | 556,122 | 485,962 |
| Benefits or Related Expenses | 3,711,194 | 3,678,047 | 3,708,849 | 3,550,477 | 3,752,800 | 3,720,800 | N/A | 3,870,800 | 3,870,800 | 4,194,900 | 4,187,900 | 4,261,900 |
| Borrowing Expenses | 7,857 | 8,908 | 5,176 | 7,907 | 10,040 | 10,040 | - | 12,010 | 12,010 | 12,010 | 12,010 | 12,010 |
| Other Expenses | 2,122,485 | 2,075,325 | 1,651,394 | 1,414,087 | 1,946,730 | 1,593,930 | 382,372 | 1,576,000 | 1,958,372 | 1,831,500 | 1,852,060 | 1,806,675 |
| Capital Expenditure | 48,940 | 44,691 | 32,388 | 61,115 | 129,263 | 106,000 | 221,600 | - | 221,600 | 135,000 | 134,000 | 70,000 |
| Intelligence and Security Department Expenses and Capital Expenditure | - | - | - | - | - | - | - | N/A | - | - | - | - |
| Multi-Category Expenses and Capital Expenditure (MCA) | ||||||||||||
| Output Expenses | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Expenses | - | - | - | - | - | - | - | - | - | - | - | - |
| Capital Expenditure | - | - | - | - | - | - | N/A | - | - | - | - | - |
Total Appropriations | 6,518,689 | 6,478,145 | 6,064,907 | 5,696,818 | 6,493,747 | 6,076,444 | 1,269,506 | 5,458,810 | 6,728,316 | 6,812,328 | 6,742,092 | 6,636,547 |
Crown Revenue and Capital Receipts | ||||||||||||
| Tax Revenue | 53,770,788 | 56,207,968 | 59,747,539 | 63,401,693 | 68,415,000 | 68,415,000 | N/A | 70,574,000 | 70,574,000 | 73,734,000 | 78,231,000 | 81,768,000 |
| Non-Tax Revenue | 1,469,715 | 1,456,383 | 1,152,579 | 1,161,292 | 1,128,500 | 1,128,500 | N/A | 1,152,500 | 1,152,500 | 1,164,500 | 1,171,500 | 1,173,500 |
| Capital Receipts | 1,246,095 | 1,111,028 | 1,388,866 | 1,424,519 | 1,358,500 | 1,358,500 | N/A | 1,427,000 | 1,427,000 | 1,518,000 | 1,595,000 | 1,675,000 |
Total Crown Revenue and Capital Receipts | 56,486,598 | 58,775,379 | 62,288,984 | 65,987,504 | 70,902,000 | 70,902,000 | N/A | 73,153,500 | 73,153,500 | 76,416,500 | 80,997,500 | 84,616,500 |
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 Appropriations in the Details of Appropriations and Capital Injections.
Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring#
There have been no restructuring adjustments to prior year information in the Summary of Financial Activity table.
1.3 - Analysis of Significant Trends#
Departmental Output Expenses
Expenditure on departmental output expenses has increased from $628 million in 2012/13 to an estimated amount of just under $646 million in 2016/17 and a budgeted amount of just under $666 million in 2017/18.
Inland Revenue continues to focus on delivering operational initiatives to improve the efficiency of operations to meet demand for services and cost pressures. Expenditure growth in the years to 2017/18 is largely driven by initiatives such as the following:
- the implementation of the child support scheme reform, property compliance package, business tax package, and Automatic Exchange of Information (AEOI) initiatives
- additional audit and compliance activity
- revenue investment
- improving child support compliance
- reducing unfiled returns, and
- complying with the Foreign Account Tax Compliance Act (FATCA).
Expenditure on Inland Revenue's transformation programme is included in the section on Departmental Other Expenses.
Departmental Other Expenses
The departmental other expenses category incorporates one multi-year appropriation for Inland Revenue's Business Transformation. This is a new appropriation effective from 1 July 2017 to 30 June 2021, and replaces the Transformation departmental other expense annual appropriation established in 2015/16.
This appropriation covers expenditure for the multi-year, business-led technology-enabled transformation of New Zealand's revenue system. As this is a multi-year appropriation, the amounts in 2017/18 to 2020/21 are indicative of the spend in each of the individual years within the overall appropriation.
The indicative spending increase in 2017/18 is a result of the implementation of a major part of Stage 2 of Business Transformation during the year. Stage 2 focuses on the delivery of all tax products in the new environment, except for GST which was successfully implemented in Stage 1 during 2016/17. In addition, it is planned that Stage 2 of Business Transformation will deliver the Accounting Income Method for calculating provisional tax and implement enabling technologies, capabilities and a new organisational model for Inland Revenue.
Non-Departmental Benefits or Related Expenses
Benefits or related expenses include appropriations for KiwiSaver, Working for Families Tax Credits, payroll subsidy, paid parental leave payments and child support payments to custodial persons.
An improving economy steadily increases KiwiSaver tax credit, child support payments to custodial persons, and paid parental leave payments. Conversely an improving economy reduces Working for Families entitlements as incomes grow.
Benefits or related expenses rise steadily through the forecast period, with the exception of the payroll subsidy. The payroll subsidy, previously $6 million per annum, ceases from 1 April 2018. Working for Families Tax Credits are significantly boosted from 1 April 2018 as a result of Budget 2017 policy changes. Income growth sees Working for Families entitlements decrease in 2019/20 relative to the previous year, but entitlements are expected to increase in the following year due to an expected indexation adjustment in April 2021.
Non-Departmental Borrowing Expenses
Borrowing expenses include interest payments for the income equalisation, adverse event, and environmental restoration account schemes. The interest payable varies with the size of the deposits in these schemes. These schemes are designed to allow taxpayers to smooth income between tax years - either to smooth out variability in incomes or to set aside income to deal with an adverse event or provide for environmental restoration costs.
Actual results to date are variable and reflect deposit balances in the schemes. The forecast for interest expense in 2017/18 and future years reflects the expected level of the schemes' activity.
Non-Departmental Other Expenses
Non-departmental other expenses include bad debt write-offs, the initial fair value write-down on student loans, and impairments relating to student loans, child support, tax, KiwiSaver, and Working for Families Tax Credits debt.
The large reduction in 2014/15 resulted from both significantly lower than forecast debt impairment mainly due to a material fall in the overdue debt book and a change in recognising impairment relating to child support due to the transition from the previous accounting standards, NZ IFRS (PBE), to PBE IPSAS in the year ended 30 June 2015.
From 2016/17 the level of non-departmental other expenses stabilises.
Non-Departmental 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.
Total tax revenue is forecast to continue to grow over the next five years at an average rate of just over 5% per annum which is only marginally higher than the forecast growth in nominal GDP.
Taxes paid by individuals, eg, PAYE and other persons' tax, are forecast to grow more slowly than GDP, mainly due to changes to tax thresholds and tax credits announced in Budget 2017.
GST is the second largest tax type administered by Inland Revenue after PAYE and is forecast to, on average, grow in line with GDP.
Company tax is forecast to grow at a faster rate than GDP due to growth in taxable profits and the tightening of some tax rules applying to multi-national companies operating in New Zealand. An expected recovery in deposit interest rates from recent lows is forecast to increase resident withholding tax on interest income.
Non-Departmental 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.
The large reduction in 2014/15 reflected the change in recognising child support penalty revenue due to the transition from previous accounting standards, NZ IFRS (PBE), to PBE IPSAS. Under the new accounting standards, PBE IPSAS, child support penalty revenue is initially recognised at fair value.
Non-Departmental 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.
The decreases in 2013/14 and 2016/17 reflect lower income equalisation reserve scheme receipts. Receipts in this scheme are forecast to stabilise from 2017/18. The growth seen in 2017/18 and future years is attributable to higher forecast student loan capital repayments, which have a steadily increasing trend each year as incomes grow.
1.4 - Reconciliation of Changes in Appropriation Structure#
| Old Structure | New Structure | |||||
|---|---|---|---|---|---|---|
| 2016/17 Appropriations in the 2016/17 Structure | 2016/17 (Current) $000 | Appropriations to which Expenses (or Capital Expenditure) have been Moved from or to | Amount Moved $000 | 2016/17 Appropriations in the 2017/18 Structure | 2016/17 (Restated) $000 | 2017/18 $000 |
Departmental Other Expenses | ||||||
| Transformation | 159,730 | Transferred to Transformation MYA | (159,730) | Transformation | - | - |
| Transformation MYA | - | Transferred from Transformation | 159,730 | Transformation MYA | 159,730 | 382,372 |
| Total changes in Appropriations | 159,730 | - | 159,730 | 382,372 | ||
From 2017/18 the Business Transformation funding has been moved to a new multi-year departmental other expense appropriation called Transformation MYA. The funding has been transferred from Transformation departmental other expense appropriation.
Explanations of the reasons for changing the appropriation structure are noted in the details of each appropriation in Parts 2-4.
Part 2 - Details of Departmental Appropriations#
2.1 - Departmental Output Expenses#
Investigations (M57)
Scope of Appropriation
Expenses and Revenue
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 173,060 | 170,677 | 173,657 |
| Revenue from the Crown | 172,517 | 172,517 | 173,089 |
| Revenue from Others | 543 | 543 | 568 |
What is Intended to be Achieved with this Appropriation
This appropriation is intended to protect the revenue base.
How Performance will be Assessed and End of Year Reporting Requirements
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of customers whose compliance behaviour improves after receiving an audit intervention (see Note 1). | 80% | 80% | 80% |
Discrepancy identified for every output dollar spent. | $7.00 | $9.00 | $7.00 |
Percentage of litigation judgments found in favour of the Commissioner. | 66% | 75% | 66% |
Supporting measure | |||
Percentage of audited customers who are satisfied with their experience (see Note 1). | 70% | 72% | 70% |
Note 1 - Actual performance measured using a sample of audit cases.
All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Revenue investment continuation | 2017/18 | - | 9,584 | 9,584 | 9,584 | - |
| Business tax package | 2016/17 | 270 | 150 | 100 | - | - |
| Revenue investment | 2015/16 | 16,602 | 16,602 | 16,602 | 16,602 | - |
| Share of costs for Budget 2015 whole-of-government initiatives | 2015/16 | (340) | (240) | (180) | (180) | (180) |
| Cashing out research and development tax losses | 2014/15 | 155 | 119 | 119 | 119 | 119 |
| Property compliance initiative continuation | 2014/15 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 |
Management of Debt and Outstanding Returns (M57)#
Scope of Appropriation#
Expenses and Revenue#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 148,286 | 146,467 | 148,301 |
| Revenue from the Crown | 145,689 | 145,689 | 145,680 |
| Revenue from Others | 2,597 | 2,597 | 2,621 |
What is Intended to be Achieved with this Appropriation#
This appropriation is intended to achieve the timely and efficient collection of revenue owed.
How Performance will be Assessed and End of Year Reporting Requirements#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of returns filed by customers on time. | 80% | 91% | 80% |
Percentage of tax payments made by customers on time. | 85% | 87% | 85% |
Cash collected for every debt dollar spent. | $40.00 | $49.50 | $40.00 |
Value of assessed revenue for every outstanding return dollar spent. | $45.00 | $110.00 | $45.00 |
Percentage of child support assessments paid on time. | 65% | 69% | 65% |
Supporting measures | |||
Percentage of growth in outstanding returns. | (2%) or less | (10%) | 0% or less |
Percentage of debt cases resolved within six months. | 80% | 83% | 80% |
Average cost of finalising an outstanding return. | $16.00-$18.00 | $13.80 | $16.00-$18.00 |
Percentage of collectable debt value over two years old. | 60% or less | 44% | 60% or less |
Percentage of debt value resolved for those who did not have a debt at the start of the year. | 65% | 73% | 65% |
Percentage of New Zealand liable parent child support debt cases resolved within 12 months. | 75% | 78% | 75% |
All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).
End of Year Performance Reporting#
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Revenue investment continuation | 2017/18 | - | 10,400 | 10,400 | 10,400 | - |
| Business tax package | 2016/17 | 1,620 | 890 | 630 | - | - |
| Share of costs for Budget 2015 whole-of-government initiatives | 2015/16 | (370) | (260) | (190) | (190) | (190) |
| Child support compliance | 2014/15 | 6,828 | 6,734 | 6,757 | - | - |
| Unfiled returns | 2014/15 | 7,188 | 6,675 | 6,675 | - | - |
| Property compliance initiative continuation | 2014/15 | 1,650 | 1,650 | 1,650 | 1,650 | 1,650 |
| Student loans overseas-based borrowers compliance initiative continuation | 2014/15 | 4,850 | 4,850 | 4,850 | 4,850 | 4,850 |
Policy Advice (M57)#
Scope of Appropriation#
Expenses and Revenue#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 9,504 | 9,097 | 9,560 |
| Revenue from the Crown | 9,483 | 9,483 | 9,537 |
| Revenue from Others | 21 | 21 | 23 |
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of ministerial satisfaction for policy advice. | 80% | 80% | 80% |
Percentage of sampled reports that meet quality standards (see Note 1). | 75% | 75% | 75% |
Average cost per hour of producing policy advice outputs. | $150.00 or less | $130.00 | $150.00 or less |
Note 1 - A quality score of 70% or better.
All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).
End of Year Performance Reporting#
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Services to Inform the Public About Entitlements and Meeting Obligations (M57)#
Scope of Appropriation#
Expenses and Revenue#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 212,145 | 209,871 | 216,454 |
| Revenue from the Crown | 210,297 | 210,297 | 214,572 |
| Revenue from Others | 1,848 | 1,848 | 1,882 |
What is Intended to be Achieved with this Appropriation#
This appropriation is intended to provide services and information to help taxpayers and other customers meet their payment obligations and receive payments they are entitled to, and help Ministers fulfil their responsibilities to Parliament and the New Zealand public.
How Performance will be Assessed and End of Year Reporting Requirements#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of customers who perceive that Inland Revenue does enough to inform them of their rights and obligations (see Note 1). | 80% | 83% | 80% |
Percentage of customers who perceive that resolving issues with Inland Revenue requires low effort (see Note 1). | 80% | 80% | 80% |
Percentage of overall customer satisfaction with the quality of Inland Revenue services to inform (see Note 1). | 90% | 90% | 90% |
Supporting measures | |||
Percentage of telephone calls answered within two minutes. | 75% | 70% | 75% |
Average cost of a customer-initiated contact. | $35.00 or less | $29.80 | $35.00 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 | 25 | 25 |
Percentage of adjudication cases completed within three months of receipt. | 90% | 95% | 90% |
Percentage of taxpayer ruling applications that have a draft ruling completed within three months of receipt. | 90% | 95% | 90% |
Percentage of non-qualifying ruling applications that have a draft ruling completed within six months of receipt. | 90% | 95% | 90% |
Percentage of public items (including relevant public consultation) completed within 18 months of allocation. | 90% | 85% | 85% |
Percentage of submissions by the applicant on any draft ruling responded to within one month of receipt. | 90% | 90% | 90% |
Note 1 - Actual performance measured using a sample of the customer population.
All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).
End of Year Performance Reporting#
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Business tax package | 2016/17 | 770 | 420 | 310 | - | - |
| Package for children living in material hardship | 2015/16 | 115 | - | - | - | - |
| Share of costs for Budget 2015 whole-of-government initiatives | 2015/16 | (580) | (400) | (300) | (300) | (300) |
| Cashing out research and development tax losses | 2014/15 | 619 | 475 | 475 | 475 | 475 |
| Child support compliance | 2014/15 | 2,276 | 2,245 | 2,253 | - | - |
| Unfiled returns | 2014/15 | 3,081 | 2,861 | 2,861 | - | - |
| Paid parental leave payment | 2013/14 | 13 | 13 | 13 | 13 | 13 |
| Parental tax credit | 2013/14 | 100 | 100 | 100 | 100 | 100 |
Services to Other Agencies RDA (M57)#
Scope of Appropriation#
Expenses and Revenue#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 3,060 | 2,460 | 3,060 |
| Revenue from the Crown | - | - | - |
| Revenue from Others | 3,060 | 2,460 | 3,060 |
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of satisfaction of the Department of Internal Affairs for services provided. | 70% | 70% | 70% |
Percentage of satisfaction of the New Zealand Productivity Commission for services provided. | 70% | 70% | 70% |
End of Year Performance Reporting#
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Services to Process Obligations and Entitlements (M57)#
Scope of Appropriation#
Expenses and Revenue#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 108,859 | 107,102 | 114,502 |
| Revenue from the Crown | 87,736 | 87,736 | 93,368 |
| Revenue from Others | 21,123 | 22,523 | 21,134 |
What is Intended to be Achieved with this Appropriation#
This appropriation is intended to deliver efficient and effective processing of tax payments, tax credit claims, and refunds and other entitlements. This contributes to the availability of revenue to fund government programmes as well as ensuring that taxpayers and other customers receive payments they are entitled to.
How Performance will be Assessed and End of Year Reporting Requirements#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Percentage of customers who perceive that Inland Revenue makes it easy for people to get it right (see Note 1). | 75% | 82% | 75% |
Percentage of social policy and tax registrations processed within five working days. | 85% | 87% | 85% |
Percentage of income tax disbursements issued within six weeks. | 85% | 88% | 85% |
Percentage of GST disbursements issued within four weeks (see Note 2). | 95% | 96% | 95% |
Supporting measures | |||
Percentage of child support assessments issued within two weeks. | 80% | 77% | 80% |
Percentage of income tax returns finalised within four weeks. | 90% | 93% | 90% |
Percentage of GST returns finalised within three weeks. | 95% | 99% | 95% |
Percentage of employer monthly schedule employee deductions finalised within four weeks. | 95% | 99% | 95% |
Average cost of processing income tax returns, GST returns and employer monthly schedules. | $5.00 or less | $2.17 | $4.00 or less |
Percentage of notices and statements produced without error (see Note 1). | 98.5% | 99% | 98.5% |
Percentage of tax credit claim payments made within three weeks. | 90% | 92% | 90% |
Percentage of Working for Families Tax Credit (WfFTC) payments made on the first regular payment date following an application. | 95% | 99% | 95% |
Percentage of paid parental leave payments issued to customers on the first pay day following the agreed date of entitlement. | 97% | 97% | 97% |
Percentage of child support administrative review decisions issued within seven weeks. | 85% | 79% | 85% |
Note 1 - Actual performance measured using a sample of the customer population.
Note 2 - Section 46 of the Goods and Services Tax Act 1985 stipulates refunds are 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.
All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).
End of Year Performance Reporting#
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Automatic Exchange of Information | 2016/17 | 1,680 | 2,620 | 3,300 | 2,700 | 2,400 |
| Package for children living in material hardship | 2015/16 | 115 | - | - | - | - |
| Share of costs for Budget 2015 whole-of-government initiatives | 2015/16 | (199) | (127) | (103) | (103) | (103) |
| Cashing out research and development tax losses | 2014/15 | 774 | 594 | 594 | 594 | 594 |
| Complying with the Foreign Account Tax Compliance Act | 2013/14 | 992 | 969 | 969 | 969 | 969 |
| Paid parental leave payments | 2013/14 | 50 | 50 | 50 | 50 | 50 |
| Parental tax credit | 2013/14 | 400 | 400 | 400 | 400 | 400 |
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 2021 | Original Appropriation | 1,112,607 |
| Adjustments to 2015/16 | - | |
| Adjustments for 2016/17 | - | |
| Adjusted Appropriation | 1,112,607 | |
| Actual to 2015/16 Year End | - | |
| Estimated Actual for 2016/17 | - | |
| Estimated Actual for 2017/18 | 382,372 | |
| Estimated Appropriation Remaining | 730,235 |
Comparators for Restructured Appropriation
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Vote, Type and Title of Appropriation | Final Budgeted $000 | Estimated Actual $000 | Budget $000 |
| Vote Revenue: Departmental Other Expense: Transformation | 159,730 | 130,930 | - |
| Total | 159,730 | 130,930 | - |
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
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Assessment of Performance | Final Budgeted Standard | Estimated Actual | Budget Standard |
Primary measures | |||
Deliver new functionality to allow customers (or their agents) to self-manage their tax obligations. | N/A | N/A | 30 April 2018 |
Accounting Income Method (AIM) regime operational in the new tax system (START). | N/A | N/A | 30 April 2018 |
Migrate all tax products to the new tax system (START). | N/A | N/A | 30 April 2018 |
Complete the stage 2 plan for implementing any further legislative changes (subject to Ministers' decisions). | N/A | N/A | 30 April 2018 |
End of Year Performance Reporting
Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Business transformation | 2015/16 | 195,000 | 226,000 | 190,000 | 156,000 | 70,000 |
2.3 - Departmental Capital Expenditure and Capital Injections#
Inland Revenue Department - Capital Expenditure PLA (M57)#
Scope of Appropriation
Capital Expenditure
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Forests/Agricultural | - | - | - |
| Land | - | - | - |
| Property, Plant and Equipment | 13,000 | 13,000 | 8,000 |
| Intangibles | 116,263 | 93,000 | 213,600 |
| Other | - | - | - |
Total Appropriation | 129,263 | 106,000 | 221,600 |
Significant Projects
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Business transformation | 91,139 | 81,700 | 199,800 |
| Total | 91,139 | 81,700 | 199,800 |
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 Business Transformation.
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 2017/18 which are:
- implementation of Business Transformation (approximately 90%), and
- maintain and improve business infrastructure including technology replacements and accommodation fit-outs (approximately 10%).
Business 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 2018.
Reasons for Change in Appropriation
This appropriation increased by $92.337 million to $221.600 million in 2017/18 mainly due to planned capital expenditure for Business Transformation, which was approved by Cabinet in November 2015.
Capital Injections and Movements in Departmental Net Assets
Inland Revenue Department
| Details of Net Asset Schedule | 2016/17 Estimated Actual $000 | 2017/18 Projected $000 | Explanation of Projected Movements in 2017/18 |
|---|---|---|---|
| Opening Balance | 273,134 | 255,461 | |
| Capital Injections | 58,110 | 181,600 | Capital transfer of $73.800 million from 2016/17 to 2017/18 to better align the funding with the implementation of Business Transformation. Capital injections of $102 million for Business Transformation which was approved by Cabinet in November 2015, and $5.800 million for the Automatic Exchange of Information (AEOI) initiative. |
| Capital Withdrawals | (75,783) | - | |
| Surplus to be Retained (Deficit Incurred) | - | - | |
| Other Movements | - | - | |
Closing Balance | 255,461 | 437,061 |
Part 3 - Details of Non-Departmental Appropriations#
3.2 - Non-Departmental Benefits or Related Expenses#
Child Support Payments PLA (M57)
Scope of Appropriation
Expenses
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 279,000 | 279,000 | 291,000 |
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 relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Addressing child support legacy debt | 2015/16 | 900 | 1,100 | 1,100 | - | - |
| Child support compliance | 2014/15 | 18,000 | 18,000 | 18,000 | - | - |
Reasons for Change in Appropriation
The increase in 2017/18 reflects an increase in the number of child support cases as a result of general population growth, and forecast improvements to the labour market. The latter increases the amount collected from non-custodial parents and transferred to custodial persons, and it also decreases the likelihood that custodial persons are dependent on the state for financial support.
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 900 | 900 | 900 |
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 to Process Obligations and Entitlements appropriation.
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 1,763,000 | 1,763,000 | 1,823,000 |
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 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 to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Budget 2017 Family Incomes Package | 2017/18 | - | 97,000 | 371,000 | 316,000 | 308,000 |
| Package for children living in material hardship | 2015/16 | (31,510) | (30,520) | (28,550) | (28,550) | (28,550) |
Reasons for Change in Appropriation#
The family tax credit is payable to families with eligible children whose family income is below the relevant abatement cut-off point. The appropriation generally declines over time because income growth reduces entitlement for families with annual family incomes over the abatement threshold.
From 1 April 2018, family tax credit entitlements for children under 16 will increase to match the 16-18 year old entitlement rates. A partial offset occurs from an increase in the abatement rate from 22.5% to 25% and a reduction in the family income abatement threshold from $36,350 to $35,000. The abatement changes reduce entitlements for those on higher incomes. The combined changes will increase family tax credit entitlement from 1 April 2018, with a full year impact in the 2018/19 year.
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 566,000 | 566,000 | 561,000 |
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 to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Budget 2017 Family Incomes Package | 2017/18 | - | - | 2,000 | 2,000 | 2,000 |
| Package for children living in material hardship | 2015/16 | 105,000 | 100,000 | 95,000 | 95,000 | 95,000 |
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 15,000 | 13,000 | 12,000 |
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 to Process Obligations and Entitlements appropriation.
Reasons for Change in Appropriation#
The interest appropriation for the 2017/18 year is lower than the previous year as a result of lower interest rates and an expected shorter holding period. This is offset to some extent by a stronger contribution base.
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 793,000 | 768,000 | 798,000 |
What is Intended to be Achieved with this Appropriation#
This appropriation provides for an annual payment to contributing members aged 18 or over who meet the eligibility criteria encouraging participation in the KiwiSaver scheme.
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 to Process Obligations and Entitlements appropriation.
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 13,000 | 13,000 | 12,000 |
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 $23,816 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 Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Package for children living in material hardship | 2015/16 | 1,600 | 1,800 | 1,800 | 1,800 | 1,800 |
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 287,000 | 282,000 | 338,000 |
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 newborn 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 to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Extending the duration of parental leave payments of preterm babies | 2015/16 | 3,400 | 3,400 | 3,400 | 3,400 | 3,400 |
| Paid parental leave payments | 2014/15 | 61,500 | 63,900 | 65,200 | 65,200 | 65,200 |
Reasons for Change in Appropriation#
The increase in 2017/18 reflects wage increases raising the average entitlement and employment growth raising the volume of qualifying recipients.
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. |
Parental Tax Credit PLA (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 30,000 | 30,000 | 29,000 |
What is Intended to be Achieved with this Appropriation#
This permanent appropriation provides for payments to families with a newborn baby for the first 70 days (10 weeks) after the birth 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 parental tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Package for children living in material hardship | 2015/16 | (490) | (480) | (450) | (450) | (450) |
| Parental tax credit | 2014/15 | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 |
Conditions on Use of Appropriation#
| Reference | Conditions |
|---|---|
| Sections MD 11-12 of the Income Tax Act 2007 | Sets out the entitlement for (MD 11) and calculation of (MD 12) the Parental Tax Credit. |
Payroll Subsidy PLA (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 5,900 | 5,900 | 5,900 |
What is Intended to be Achieved with this Appropriation#
This permanent appropriation provides for payments to payroll agents who undertake payroll services on behalf of small businesses so they can focus their efforts on growing their businesses.
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 payment of a payroll subsidy under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.
Current and Past Policy Initiatives#
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Making Tax Simpler: Better Administration of PAYE and GST | 2017/18 | - | (1,700) | (7,300) | (8,100) | (8,100) |
Conditions on Use of Appropriation#
| Reference | Conditions |
|---|---|
| Section RP 4 of the Income Tax Act 2007 | Establishes the payment of a subsidy by the Commissioner to a listed PAYE intermediary for a payroll service that they provide to an employer (RP 4(1)). The calculation of the subsidy is specified in the Income Tax Act (Payroll Subsidy) regulations. |
3.3 - Non-Departmental Borrowing Expenses#
Adverse Event Interest PLA (M57)#
Scope of Appropriation
Expenses
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 40 | 40 | 10 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for interest payments on deposits held in an adverse event income equalisation scheme. This scheme allows farmers who experience adverse events to carry income from forced livestock sales over to the next income year.
Reasons for Change in Appropriation
After increased activity in 2016/17, the decrease in 2017/18 reflects an expectation that activity in the scheme will return to more typical levels, resulting in lower interest payments.
Environmental Restoration Account Interest PLA (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 2,000 | 2,000 | 2,000 |
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#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 8,000 | 8,000 | 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 increase in 2017/18 allows for potential volatility in the usage of the income equalisation scheme.
3.4 - Non-Departmental Other Expenses#
Impairment of Debt and Debt Write-Offs (M57)#
Scope of Appropriation
Expenses
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 950,000 | 750,000 | 800,000 |
What is Intended to be Achieved with this Appropriation
This appropriation provides for incurring the expense involved in the write-off of the Crown debt and for recognising an impairment loss to reflect the recoverable value of the Crown debt as at the end of a financial year, relating to 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 Management of Debt and Outstanding Returns appropriation.
Current and Past Policy Initiatives
| Policy Initiative | Year of First Impact | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Revenue investment continuation | 2017/18 | - | (6,525) | (6,525) | (6,525) | - |
| Small business tax package | 2016/17 | (14,000) | (27,000) | (53,000) | (78,000) | (100,280) |
| Revenue investment | 2015/16 | 11,601 | 11,601 | 11,601 | 11,601 | - |
| Unfiled returns | 2014/15 | 19,698 | 19,698 | 15,758 | - | - |
Reasons for Change in Appropriation
The decrease in 2017/18 reflects a material reduction in the overall level of overdue debt and hence impairment as these are inter-related.
Impairment of Debt Relating to Child Support (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 5,000 | - | - |
What is Intended to be Achieved with this Appropriation#
This appropriation provides for incurring the expense involved in recognising an impairment loss to reflect the recoverable value of the total child support debt as at the end of the financial year.
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 child support debt. Performance information relating to this expenditure is provided under the Management of Debt and Outstanding Returns appropriation.
Reasons for Change in Appropriation#
The decrease in 2017/18 is due to a forecast change in the expected impairment.
Impairment of Debt Relating to Student Loans (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 143,000 | 43,000 | 100,000 |
What is Intended to be Achieved with this Appropriation#
This appropriation provides for incurring the expense to recognise an impairment loss and reflect the recoverable value of the total student loan debt at the end of a financial year.
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 student loan debt. Performance information relating to this expenditure is available to the House of Representatives in the Student Loan Scheme Annual Report 2018.
Reasons for Change in Appropriation#
The decrease in 2017/18 reflects an allowance based on the historical impairment which can be volatile.
Initial Fair Value Write-Down Relating to Student Loans (M57)#
Scope of Appropriation#
Expenses#
| 2016/17 | 2017/18 | ||
|---|---|---|---|
| Final Budgeted $000 | Estimated Actual $000 | Budget $000 | |
| Total Appropriation | 689,000 | 670,000 | 676,000 |
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 | 2016/17 Final Budgeted $000 | 2017/18 Budget $000 | 2018/19 Estimated $000 | 2019/20 Estimated $000 | 2020/21 Estimated $000 |
|---|---|---|---|---|---|---|
| Annual maximum fee movement for 2017 and 2018 | 2016/17 | 1,516 | 2,971 | 3,262 | 3,380 | 3,380 |
| Response to the Syrian refugee crisis: implementation | 2016/17 | 34 | 49 | 25 | 12 | - |
| Delivering support to graduate-entry students affected by the 7 EFTS limit to complete long undergraduate programmes | 2015/16 | 561 | 797 | 969 | 627 | - |
| Investing to increase the number of engineering graduates | 2015/16 | 44 | 108 | 477 | 371 | 990 |
| Maintain the student allowance parental income threshold | 2015/16 | 444 | 1,623 | 2,520 | 2,520 | 2,520 |
| Set the annual maximum fee movement to 3% for 2016 | 2015/16 | (4,960) | (5,173) | (5,363) | (5,363) | (5,363) |
| Supporting better pubic services and business growth within Vote Tertiary Education | 2015/16 | 1,665 | 1,965 | 2,013 | 2,013 | 2,013 |
| Additional medical places | 2014/15 | 769 | 1,242 | 1,552 | 1,644 | 1,644 |
| Extending the student support stand-down period for permanent residents | 2014/15 | (4,409) | (4,409) | (4,409) | (4,409) | (4,409) |
| Suspending the student loan repayment threshold until 1 April 2017 | 2014/15 | (11,132) | (11,260) | (11,260) | (11,260) | (11,260) |
| 20 additional medical places | 2013/14 | 513 | 639 | 676 | 676 | 676 |
| Additional flexibility for highly performing private training establishments | 2013/14 | 4,827 | 4,827 | 4,827 | 4,827 | 4,827 |
| Continue 99-105% tolerance bands | 2013/14 | 1,893 | 1,893 | 1,893 | 1,893 | 1,893 |
| Reducing student allowances eligibility for students aged 40 and over | 2013/14 | 783 | 783 | 783 | 783 | 783 |
| Removing student allowances eligibility for those aged 65 and over | 2013/14 | (627) | (627) | (627) | (627) | (627) |
Reasons for Change in Appropriation#
The decrease in 2017/18 is due to macroeconomic changes impacting on the initial fair value ratio used to calculate the write-down. This calculation is compliant with and required by accounting standards, Public Benefit Entity International Public Sector Accounting Standards.