Deloitte Dunedin tax
partner Peter Truman yesterday raised concerns about the
potential sharing between government agencies of information
gathered by Inland Revenue.
If information was to pass from IRD to other government
agencies, there needed to be an independent review of the
basis for passing the information, to determine whether the
information request was appropriate and that taxpayer rights
were being protected.
''A decision to pass information should not rest solely with
public servants,'' Mr Truman said.
The Government was consulting on a proposal that would enable
IRD to share information with other enforcement agencies
where serious crime was suspected.
IRD and other government agencies already share data in areas
including: ACC, to enable levies to be invoiced based on tax
return data; Ministry of Social Development, to confirm
community services card eligibility; Ministry of Business,
Innovation and Enterprise, to confirm parental leave payment
eligibility; New Zealand Customs, to enable interest to be
charged on student loans where borrowers were offshore;
Ministry of Justice, to help find people with outstanding
fines; and the Department of Statistics.
Mr Truman said IRD had wide powers of access to require
taxpayers and third parties to provide information. Income
from illegal activities, such as drug-dealing, was still
taxable and the IRD might already hold data on illegal
The New Zealand tax system was based on voluntary compliance,
with taxpayers encouraged to meet their tax obligations of
their own free will, he said.
A key component of that approach was that IRD would identify
those who did not comply and, where appropriate, penalise
them for not doing so.
''If information that is provided to IRD can be shared with
other government enforcement agencies, this could act as a
disincentive for taxpayers to provide information to IRD.
This runs counter to the objective of encouraging voluntary
Given the wide information-gathering powers IRD had, Deloitte
was concerned that being able to use the information for a
purpose other than administration of the tax system created
potential anomalies between various government agencies and
their respective information-gathering powers, Mr Truman
Labour Party revenue spokesman David Cunliffe said the
near-daily revelations of major privacy breaches raised
serious questions over plans to radically increase sharing of
taxpayers' private information.
''Given the litany of privacy and information security
disasters in recent weeks, including three today, New
Zealanders will be very concerned about National's plans to
pass around their personal tax information.
''It's not like people have faith in IRD. That department
breached the privacy of 6300 people in the space of 12
months,'' he said.
Telecommunications Users Association chief executive Paul
Brislen said the continuing privacy breaches from government
departments came from giving people the tools to do one job
then requiring them to use those tools for another purpose.
He advocated the heads of the government agencies starting
immediately to audit their processes and procedures. The
problem was not software, it was the ''incompetence'' of some
of the people using the software.
''It starts at the top. They need to find out who has access
to the material and what security is like for those people.
This is not an IT problem, it is a procedure problem.''
The solution could be costly, but Mr Brislen said he was not
advocating departments hire ''hackers'' to test the systems.
Simple measures such as people checking the right documents
were being sent to the correct recipients could be introduced
Another solution was putting information on a secure database
to allow people to look at it but not copy it and send it on,