Rurawhe Adrian; Bayly AndrewPart 2 Amendments to Tax Administration Act 1994ASSISTANT SPEAKER (Adrian Rurawhe): We now come to the debate on Part 2 the debate on clauses 4 to 103 Amendments to Tax Administration Act 1994" and Schedules 1 3 4 and 5.ANDREW BAYLY (National—Hunua): Thank you Mr Chair. I just want to start talking about pre-population of accounts which is a crucial aspect of making sure that this legislation actually comes into account and can actually operate. The thing about this—I don't know if everyone understands the importance of it but we have a situation in New Zealand where we have a million taxpayers who've previously had a relationship with the IRD. We've got roughly a million that have had a relationship with an intermediary—and they're called personal tax summary intermediaries or PTSI. There are about 30 of them in New Zealand who have been managing the accounts for New Zealanders with regard to their interactions with the IRD. Then we've got a million people in New Zealand who've had no dealings with the tax department. We're now going and implementing a system which the Minister's overseeing whereby we are going to see some fundamental changes in terms of the relationship that taxpayers have with the IRD. But more worrying in some ways: whilst we expect about 1.6 million taxpayers to get a refund 263000—this is the estimate—will be getting a tax bill and of that 263000 about 115000 will never have received a tax bill from the IRD before.Now the issue with that million that I said have had no relationship with or have had anything to do with tax is: how do you get them to pre-populate their accounts with the IRD and how does the IRD have a relationship with them if they've never had a relationship? Now one of the things we know is that the budget for IRD that they've allocated for trying to get these people on board is about $4 million but the ability for this legislation actually to work depends on the relationship of the IRD with the taxpayer. Unfortunately and I haven't seen it to date the marketing of it and just the general awareness of the requirements for taxpayers to actually go in and have a relationship on their MyIR account—and it will only be activated if someone logs in and at that point the IRD can actually start to form a relationship. Because there's been so little advertising around that the issue about these people not knowing about it—because not everyone reads the paper not everyone listens to National Radio and Morning Report—is that those people are likely to be at risk of not fulfilling their tax obligations and also probably in some cases not being able to get the tax refund that they're actually entitled to.I think there's an element—and one of the things I'd like the Minister to answer is about how the department is getting on in terms of obtaining those contacts and whether it's going to rely on section 17. It is good that Mr Willie Jackson's in the chair because I think whether there is a compulsory element to the obligation to require or provide that information to IRD is crucially important.The other thing I'd like him to speak to—and he may not be able to and at some point I'd like to press the Minister for a response—is actually how many contact details the IRD has got at the moment—or more importantly how many they haven't got. I think the issue about this—just given the timing perspective—is that this bill comes into force on 1 April. That's not long away. Normally refunds for the 2017-18 year or for any year to that effect will be paid out by June of the following year. So if we're finishing our March year at the end of this month the IRD would normally be paying out our refunds by June. Whether or not there are in fact any key performance indicators (KPIs)—and I don't think we've seen anything about the KPIs—the obligation to refund taxpayers the money that they are due from the tax system is crucially important and people will be wanting it and they are entitled to it. So that's one issue around the refunds.The other side of the coin is the need to be able to make your payment if you've got a tax bill. Of course if you're not aware of your tax bill you don't know that you have to make that obligation. But the cut-off time for making your final tax payment is actually February next year for the year that finishes 31 March this year and so it is absolutely vitally important that the IRD has the contact details to be able to go and do that to make the refunds but also to tell people about their tax obligations.As I said 115000 people will be receiving a tax bill for the first time. Now with regard to this we understand that the IRD have taken on 300 more people in the call centre. That is an increase obviously but there are many hundreds of thousands of calls that were not taken during the 2017-18 year—the current year. All that's going to escalate—all that's going to be even worse as we move to this new system which whilst we are very supportive of the idea in the way it's been managed and the way the Minister's looking after it it needs to be seriously questioned. I think whilst you might have call centres if people don't actually understand how they're going to—or that they have a requirement to—call the call centre it actually raises some significant issues.I think the other aspect to this is the reliance on as I said before the personal tax summary intermediaries the PTSIs which are the intermediaries—the 30 companies that have been acting for a million taxpayers. At the moment I understand that many of them supplied the information but what is the requirement for them to provide all that information—and whether in fact they have. So I'd like the Minister to talk about that aspect.I think the issue around the portal—just returning to the original idea around the pre-populated account. So in the pre-populated account there are two crucial aspects. One is your contact details—obviously name email address and mobile but probably most importantly their email address because that's the mechanism that in many cases will be the primary mechanism for communication. But there's also the physical address because in many cases the IRD send physical letters to taxpayers. I think the issue is getting the pre-population around this for people: older people in rest homes older people generally—and my mother's 92 and she doesn't have a computer and is unlikely to at her age—and just generally non - computer users. The system and the ability to be able to interact with the IRD which is primarily being now driven towards a digital platform makes it increasingly difficult.I think this is a big issue because if you're a taxpayer and you are not aware of your tax obligations or you've just assumed that you haven't had to do anything for years—which is a reasonable assumption—and you have a debt that the tax department has assessed then of course the use-of-money interest rates are significant and the rates of penalties build up very very quickly and the financial cost of that is quite significant. The bill actually covers if you do pay off some of your penalties the order in which it gets paid off and the last bit that gets paid off is actually the original tax obligation. So you'll have to go through all the use-of-money penalties all those sorts of things. So that debt balloons very very quickly. I think those aspects to it—how the IRD is actually going about doing its job getting all those contacts those million contacts and how it's going to do that in the time frame its KPI's of delivering that—are all questions that I'm just hoping that the Minister will answer because without these this piece of legislation's not going to work. You can look at the various aspects to it but it's a crucial part of the success of this whole bill. Thank you Mr Chair."