Supplementary estimates of appropriations

Vote Revenue - Supplementary Estimates 2015/16

APPROPRIATION MINISTER(S): Minister of Revenue (M57)

APPROPRIATION ADMINISTRATOR: Inland Revenue Department

RESPONSIBLE MINISTER FOR INLAND REVENUE DEPARTMENT: Minister of Revenue

Details of Appropriations and Capital Injections#

Annual and Permanent Appropriations#

  2015/16
Titles and Scopes of Appropriations by Appropriation Type Estimates
Budget
$000
Supplementary
Estimates
Budget
$000
Total
Budget
$000

Departmental Output Expenses

     

Investigations (M57)

This appropriation is limited to undertaking investigation, audit and litigation activities administered by Inland Revenue.
176,168 (6,762) 169,406

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.
146,169 9,946 156,115

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.
8,002 1,250 9,252

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.
250,758 (18,930) 231,828

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 - 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.
125,734 (10,498) 115,236

Total Departmental Output Expenses

709,891 (24,994) 684,897

Departmental Other Expenses

     

Transformation (M57)

This appropriation is limited to the design, and implementation of Stage 1, of a modern system for tax revenue and social policy administered by Inland Revenue.
55,000 37,900 92,900

Total Departmental Other Expenses

55,000 37,900 92,900

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.
105,000 (16,674) 88,326

Total Departmental Capital Expenditure

105,000 (16,674) 88,326

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).
276,000 7,000 283,000

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).
1,100 - 1,100

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).
1,837,000 (13,000) 1,824,000

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).
529,000 (7,000) 522,000

KiwiSaver: Interest (M57)

To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006.
15,000 (2,000) 13,000

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.
705,000 (16,000) 689,000

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).
16,000 (2,000) 14,000

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.
233,000 5,000 238,000

Parental Tax Credit PLA (M57)

To enable payment of additional financial support to be made to working families for the eight week period following the birth of a child (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
31,000 - 31,000

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.
5,100 (400) 4,700

Total Benefits or Related Expenses

3,648,200 (28,400) 3,619,800

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.
10 10 20

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

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.
15,000 (2,000) 13,000

Total Non-Departmental Borrowing Expenses

17,010 (1,990) 15,020

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.
1,179,224 - 1,179,224

Impairment of Debt and Debt Write-Offs Relating to Child Support (M57)

This appropriation is limited to impairment and bad debt write-offs relating to child support debt.
353,340 (348,340) 5,000

Impairment of Debt Relating to Student Loans (M57)

This appropriation is limited to the impairment of student loan debt.
100,000 (66,000) 34,000

Initial Fair Value Write-Down Relating to Student Loans (M57)

This appropriation is limited to the initial fair value write-down of student loans.
646,000 44,000 690,000

Total Non-Departmental Other Expenses

2,278,564 (370,340) 1,908,224

Total Annual and Permanent Appropriations

6,813,665 (404,498) 6,409,167

Capital Injection Authorisations#

  2015/16
  Estimates Budget
$000
Supplementary
Estimates Budget
$000
Total Budget
$000
Inland Revenue Department - Capital Injection (M57) 2,480 - 2,480

Supporting Information#

Part 1 - Vote as a Whole#

1.2 - Trends in the Vote

Summary of Financial Activity

  2015/16
    Supplementary Estimates  
  Estimates
$000
Departmental
Transactions
$000
Non-Departmental
Transactions
$000
Total
Transactions
$000
Total
$000

Appropriations

         
Output Expenses 709,891 (24,994) - (24,994) 684,897
Benefits or Related Expenses 3,648,200 N/A (28,400) (28,400) 3,619,800
Borrowing Expenses 17,010 - (1,990) (1,990) 15,020
Other Expenses 2,333,564 37,900 (370,340) (332,440) 2,001,124
Capital Expenditure 105,000 (16,674) - (16,674) 88,326
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

6,813,665 (3,768) (400,730) (404,498) 6,409,167

Crown Revenue and Capital Receipts

         
Tax Revenue 62,137,000 N/A 399,000 399,000 62,536,000
Non-Tax Revenue 1,523,000 N/A (371,000) (371,000) 1,152,000
Capital Receipts 1,317,000 N/A 125,400 125,400 1,442,400

Total Crown Revenue and Capital Receipts

64,977,000 N/A 153,400 153,400 65,130,400

Part 2 - Details of Departmental Appropriations#

2.1 - Departmental Output Expenses

Investigations (M57)

Scope of Appropriation

This appropriation is limited to undertaking investigation, audit and litigation activities administered by Inland Revenue.

Expenses and Revenue

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Total Appropriation 176,168 (6,762) 169,406
Revenue from the Crown 175,903 (6,762) 169,141
Revenue from Others 265 - 265

Reasons for Change in Appropriation

This appropriation decreased by ($6.762 million) to $169.406 million for 2015/16 due to:

  • a fiscally neutral adjustment of ($2.900 million) to reflect changes in expenditure assumptions between departmental output expenses
  • a fiscally neutral adjustment of ($2.500 million) to reflect Inland Revenue's funding contribution to the business transformation programme
  • a transfer of ($1.671 million) from 2015/16 to 2019/20 to align with the timing of capital expenditure for the business transformation programme, and
  • the return of ($380,000) relating to Inland Revenue's share of costs for Budget 2015 whole-of-government initiatives.

This is partially offset by a transfer of $689,000 from 2014/15 to 2015/16 for restructuring costs.

Management of Debt and Outstanding Returns (M57)

Scope of Appropriation

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.

Expenses and Revenue

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Total Appropriation 146,169 9,946 156,115
Revenue from the Crown 143,207 9,946 153,153
Revenue from Others 2,962 - 2,962

Reasons for Change in Appropriation

This appropriation increased by $9.946 million to $156.115 million for 2015/16 due to:

  • a fiscally neutral adjustment of $13.390 million to reflect changes in expenditure assumptions between departmental output expenses, and
  • a transfer of $717,000 from 2014/15 to 2015/16 for restructuring costs.

This is partially offset by:

  • a fiscally neutral adjustment of ($2.100 million) to reflect Inland Revenue's funding contribution to the business transformation programme
  • a transfer of ($1.431 million) from 2015/16 to 2019/20 to align with the timing of capital expenditure for the business transformation programme
  • the return of ($410,000) relating to Inland Revenue's share of costs for Budget 2015 whole-of-government initiatives, and
  • a net reduction of ($220,000) represented by the return of ($400,000) and a transfer of $180,000 from 2014/15 to 2015/16 for the child support scheme reform initiative.

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

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Total Appropriation 8,002 1,250 9,252
Revenue from the Crown 8,000 1,250 9,250
Revenue from Others 2 - 2

Reasons for Change in Appropriation

This appropriation increased by $1.250 million to $9.252 million for 2015/16 due to a fiscally neutral adjustment of $1.250 million to reflect changes in expenditure assumptions between departmental output expenses.

Services to Inform the Public About Entitlements and Meeting Obligations (M57)

Scope of Appropriation

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.

Expenses and Revenue

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Total Appropriation 250,758 (18,930) 231,828
Revenue from the Crown 249,297 (18,930) 230,367
Revenue from Others 1,461 - 1,461

Reasons for Change in Appropriation

This appropriation decreased by ($18.930 million) to $231.828 million for 2015/16 due to:

  • a transfer of ($7.448 million) from 2015/16 to 2019/20 to align with the timing of capital expenditure for the business transformation programme
  • a fiscally neutral adjustment of ($7.050 million) to reflect changes in expenditure assumptions between departmental output expenses
  • a fiscally neutral adjustment of ($3.600 million) to reflect Inland Revenue's funding contribution to the business transformation programme
  • a net reduction of ($1.518 million) represented by the return of ($2.760 million) and a transfer of $1.242 million from 2014/15 to 2015/16 for the child support scheme reform initiative, and
  • the return of ($650,000) relating to Inland Revenue's share of costs for Budget 2015 whole-of-government initiatives.

This is partially offset by:

  • a transfer of $1.156 million from 2014/15 to 2015/16 for restructuring costs, and
  • a transfer of $180,000 from 2014/15 to 2015/16 for the paid parental leave payments initiative.

Services to Process Obligations and Entitlements (M57)

Scope of Appropriation

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.

Expenses and Revenue

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Total Appropriation 125,734 (10,498) 115,236
Revenue from the Crown 104,737 (10,498) 94,239
Revenue from Others 20,997 - 20,997

Reasons for Change in Appropriation

This appropriation decreased by ($10.498 million) to $115.236 million for 2015/16 due to:

  • a fiscally neutral adjustment of ($4.690 million) to reflect changes in expenditure assumptions between departmental output expenses
  • a transfer of ($4.450 million) from 2015/16 to 2019/20 to align with the timing of capital expenditure for the business transformation programme
  • a fiscally neutral adjustment of ($1.800 million) to reflect Inland Revenue's funding contribution to the business transformation programme
  • a net reduction of ($462,000) represented by the return of ($840,000) and a transfer of $378,000 from 2014/15 to 2015/16 for the child support scheme reform initiative
  • the return of ($214,000) relating to Inland Revenue's share of costs for Budget 2015 whole-of-government initiatives, and
  • the return of ($40,000) relating to the contribution to the data futures partnership initiative.

This is partially offset by:

  • a transfer of $720,000 from 2014/15 to 2015/16 for the paid parental leave payments initiative, and
  • a transfer of $438,000 from 2014/15 to 2015/16 for restructuring costs.

2.2 - Departmental Other Expenses

Transformation (M57)

Scope of Appropriation

This appropriation is limited to the design, and implementation of Stage 1, of a modern system for tax revenue and social policy administered by Inland Revenue.

Reasons for Change in Appropriation

This appropriation increased by $37.900 million to $92.900 million for 2015/16 due to:

  • additional funding of $44 million for the implementation phase of the business transformation programme
  • a fiscally neutral adjustment of $10 million to reflect Inland Revenue's funding contribution to the business transformation programme, and
  • a transfer of $5 million from 2014/15 to 2015/16 for the design phase of the business transformation programme.

Partially offset by:

  • a transfer of ($16 million) from 2015/16 to 2016/17 for the implementation phase of the business transformation programme, and
  • the return of ($5.100 million) for the design phase of the business transformation programme.

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

  2015/16
  Estimates
$000
Supplementary
Estimates
$000
Total
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 10,000 (2,400) 7,600
Intangibles 95,000 (14,274) 80,726
Other - - -

Total Appropriation

105,000 (16,674) 88,326

Reasons for Change in Appropriation

This appropriation decreased by ($16.674 million) to $88.326 million for 2015/16 due to updated business decisions relating to the business transformation programme and revised timelines for leasehold improvement projects. The original estimates of $60 million for the business transformation programme were based on high level assumptions at a point in time. Subsequent to this, business transformation has completed a business case approved by Cabinet that included updated financials of $46 million. This budget has now been updated as per the business case approved by Cabinet in November 2015.

Capital Injections and Movements in Departmental Net Assets

Inland Revenue Department

Details of Net Asset Schedule 2015/16
Main Estimates Projections
$000
2015/16
Supplementary Estimates Projections
$000
Explanation of Projected Movements in 2015/16
Opening Balance 277,093 277,093 Supplementary Estimates opening balance reflects the audited results as at 30 June 2015.
Capital Injections 2,480 2,480 Capital injections of $483,000 for the complying with the Foreign Account Tax Compliance Act initiative, and $1.997 million for the cashing out research and development tax losses initiative.
Capital Withdrawals (34) (34) Capital withdrawal of $34,000 for the complying with the Foreign Account Tax Compliance Act initiative.
Surplus to be Retained (Deficit Incurred) - -  
Other Movements - -  

Closing Balance

279,539 279,539  

Part 3 - Details of Non-Departmental Appropriations#

3.2 - Non-Departmental Benefits or Related Expenses

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).

Reasons for Change in Appropriation

The increase in this appropriation of $7 million from $276 million to $283 million in 2015/16 is due to stronger than previously assumed employment growth, and less welfare dependency, amongst custodial parents.

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).

Reasons for Change in Appropriation

The decrease in this appropriation of ($13 million) from $1,837 million to $1,824 million in 2015/16 is due to higher than assumed incomes causing more abatement.

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).

Reasons for Change in Appropriation

The decrease in this appropriation of ($7 million) from $529 million to $522 million in 2015/16 is due to a reduction in year-end lump sum entitlements reflecting stronger than assumed family incomes in the prior year.

KiwiSaver: Interest (M57)

Scope of Appropriation

To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006.

Reasons for Change in Appropriation

The decrease in this appropriation of ($2 million) from $15 million to $13 million in 2015/16 is due to lower interest rates than were forecast in Budget 2015.

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.

Reasons for Change in Appropriation

The decrease in this appropriation of ($16 million) from $705 million to $689 million in 2015/16 is due to a lower than forecast average member tax credit entitlement per person, flowing from lower than forecast wage growth.

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).

Reasons for Change in Appropriation

The decrease in this appropriation of ($2 million) from $16 million to $14 million in 2015/16 is due to lower than forecast demand to date.

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.

Reasons for Change in Appropriation

The increase in this appropriation of $5 million from $233 million to $238 million in 2015/16 is due to a $5 million contingency to reduce the likelihood of the appropriation being overspent in the final three months of the year.

Payroll Subsidy PLA (M57)

Scope of Appropriation

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.

Reasons for Change in Appropriation

The decrease in this appropriation of ($400,000) from $5.100 million to $4.700 million in 2015/16 is due to slightly lower than expected year-to-date demand.

3.3 - Non-Departmental Borrowing Expenses

Adverse Event Interest PLA (M57)

Scope of Appropriation

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.

Reasons for Change in Appropriation

The increase in this appropriation of $10,000 from $10,000 to $20,000 in 2015/16 is due to an increase in activity in the scheme during the year.

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.

Reasons for Change in Appropriation

The decrease in this appropriation of ($2 million) from $15 million to $13 million in 2015/16 is due to lower than assumed interest incurred.

3.4 - Non-Departmental Other Expenses

Impairment of Debt and Debt Write-Offs Relating to Child Support (M57)

Scope of Appropriation

This appropriation is limited to impairment and bad debt write-offs relating to child support debt.

Reasons for Change in Appropriation

The decrease in this appropriation of ($348.340 million) from $353.340 million to $5 million is due to the change in accounting standards from previous NZ IFRS (PBE) to PBE IPSAS in 2014/15. Child support penalty revenue is now initially recognised at fair value under the new accounting standards instead of at nominal value. This change will result in a much smaller subsequent impairment number at year-end.

Impairment of Debt Relating to Student Loans (M57)

Scope of Appropriation

This appropriation is limited to the impairment of student loan debt.

Reasons for Change in Appropriation

The decrease in this appropriation of ($66 million) from $100 million to $34 million in 2015/16 is due to the interim valuation of the scheme, current policy initiatives and a contingency for volatility in the data and modeling assumptions in the valuation. The interim valuation of the scheme was completed in April 2016 and the final valuation as at 30 June 2016 will be based on additional roll forward data and June macro-economic assumptions.

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.

Reasons for Change in Appropriation

The increase in this appropriation of $44 million from $646 million to $690 million in 2015/16 is due to an increase in the lending forecast which increases the initial fair value write-down relating to student loans.