Dunne Peter: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Dunne Peter: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13719] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will respond briefly to a couple of the questions that have been raised. I want to go back to Dr Smith’s comments earlier. I have now received some information about the interim measures that were put in place over the last year which he may be interested in. I am advised that since the legislation was passed last year the commissioner has received some 604 applications not to apply penalties and of those 604 applications 393 have been agreed to. That is about two-thirds in the year to June 2007. It is clear contrary to the assertion that has been made that the interim measures actually have worked out extremely well. If two-thirds of the applications for relief have been agreed to then I think that is a pretty high hit rate. I think it sets a good platform for the changes that are contained in the current bill. 
Mr Tremain asked some interesting and valuable questions about the new GST filing rules. Just to refresh the point on this I note that we are moving from a system where at the moment effectively a penalty is applied to the principal outstanding to one where in certain circumstances a fee of either $50 or $250 becomes payable. The concern he was raising was related to how arbitrary the application of those fees would be. In other words could we have a situation where at the moment under the current regime that amount might be added to principal and take some time to be resolved but a flat regime of specified amounts could apply immediately? 
I want to assure the member of a couple of things. Firstly the way this regime will work in practice is that where a taxpayer clearly is in error through the employer monthly schedule then the Inland Revenue Department will advise that person that the GST payment is late and that subsequent breaches will be penalised. The late filing penalty will be imposed on any returns that are filed late in the 12 months following that first breach. So if all the returns are on time then the process kicks off next time around. So I want to assure him that the concern he expressed as I understood it related to whether the removal of the current regime and its replacement with a flat fee would mean that people would simply be stung like an instant traffic fine. The answer is no. They will receive a warning and if there is a breach for the second time within that 12-month period then those fees will apply. 
I again want to make the point that this change is really designed to simplify the process to make it easier for people to comply and to get away from a situation where the way in which the current rules apply often means that the debt imposed is much greater than simply having a fee regime. But we are not going to turn the Inland Revenue Department in this instance into a set of GST traffic cops who go around stinging those who fail to meet that first date. There will be that warning period then the follow-up if the breach is repeated within the 12-month period.