Dunedin tax practitioner Scott Mason, who is on the simplification panel, talks to business editor Dene Mackenzie.
The Inland Revenue Department is embarking on a generational change, something which last happened 21 years ago, Crowe Horwath tax managing principal Scott Mason says.
Much of the early publicity about the transformation process had centred on the introduction of a new $1.5 billion computer system and the likelihood of an overseas contract being awarded.
However, Mr Mason told the Otago Daily Times the process was much wider than a computer system.
''We are looking at everything in the tax system - how do we do these things better, greater efficiency, more interaction with taxpayers in a better way and being more responsive?''
New Zealand's tax system was regarded highly globally, despite its 21-year-old computer system. The core system had been retained, with new things, such as Working for Families, bolted on, he said.
''We've got to a state where we can't bolt anything else on. If there had been a change of government, and the introduction of a capital gains tax, it probably could not be implemented.''
Mr Mason was appointed to the simplification panel by Revenue Minister Todd McClay for a two-year term, which started in August.
The first meeting was delayed until after the election in case a new minister was appointed but with the reappointment of Mr McClay, the panel had held its first meeting and set the agenda.
So far, time spent on the project had been light but Mr Mason expected the tempo and workload to substantially increase later this year.
Asked why he was keen to serve on the panel, he said if he could make three changes to improve New Zealand's tax system during his time, they were three changes that might not otherwise be made.
The panel was to be used as a sounding board, or a logic check, to give feedback on what was or was not working well for IRD, Mr Mason said.
With the deepest knowledge on tax law of the panel members, he aimed to introduce improvements to make life easier for small- to medium-sized enterprises (SMEs), which made up most of New Zealand's businesses.
The last time the department made this type of change, it took taxpayers out of the system.
''If you are on a salary or wages, interest and dividends, you don't need to file a return. Now we are trying to reduce the many ways you have contact with the department by asking how do we do this in the most responsive manner?''
In the future, the way the IRD captured information needed to be more responsive, Mr Mason said. He saw a time when the department tapped into a business system to extract payroll data in a more timely fashion, reducing compliance for businesses.
Now, businesses filled out certain forms on a set day for a particular function, like GST or Paye. That double handling could be eliminated.
A pilot programme in Hawkes Bay had already provided some ideas for the panel to expand, he said. Once the ideas were investigated to discover trends and themes, the panel would start providing ideas to IRD on where to focus its energy.
''There is general acceptance the good ideas can come from anywhere. We will all use our networks to tap into the community and discover pressure points.
''It is difficult to step back but this is what we need to do. We can learn from the past. Already, people are telling us timeliness of information and connectivity with the IRD are important.''
Many of the suggestions to the department would be outside the panel's mandate but Mr Mason hoped the ideas would be passed on to other areas within IRD, such as policy analysts.
Some of the early feedback was on technical aspects which would be added to the mix. The panel was seeking clarity on tax rules as part of the review.
''It's no use having the best interface in the world if we don't understand the rules. The department is open and supportive and has genuine desire to create a legacy, as it did 21 years ago.''
There was an acceptance New Zealanders wanted to pay the correct amount of tax, no more and no less, he said. For that to happen there had to be certainty and a belief the rules were fair. Unfairness created wrong behaviour, seen when the top tax rate was at 39%.
Many people felt the rate was unfair and adjusted their business interests accordingly.
But if the system was open and perceived as fair, no-one would spend time avoiding paying tax. Instead, they would be thinking about growing their businesses and employing people.
Panel members
• Henri Eliot: (chairman): chief executive of Board Dynamics, Auckland.
• Courtney Johnston: director of Hutt City Museums, Wellington.
• Darren Stuart: head of Trade Me Customer Support, Wellington.
• Scott Mason: managing principal of tax at Crowe Horwath, Dunedin.
• Brian Steele: executive director of Shoreline Partners, Wellington.
• Kerry Dalton: chief executive at the New Zealand Association of Citizens Advice Bureaux, Wellington.
