A 100-page tax change document was released during a speech by Prime Minister John Key, who focused on the changes being made to the way small and medium-sized enterprises (SME) dealt with things like provisional tax and use of money interest.
Deloitte Dunedin tax partner Peter Truman said the changes would also allow IRD to provide information on tax debt to credit reporting agencies.
‘‘Anecdotally, we are aware of some businesses with cash-flow issues paying other creditors ahead of paying IRD because of the impact failing to pay the other creditors will have on their credit rating.
‘‘IRD will be counting on the potential disclosure to help motivate taxpayers with arrears to pay up.''
Current tax secrecy and privacy laws prevented IRD from sharing information with credit agencies, he said.
Changes would be made to allow information about tax debts to be shared with those agencies.
Officials perceived an information gap for some businesses who could not make informed lending and credit decisions because those with significant tax debt issues were not identifiable during the standard credit checks.
Mr Truman said there needed to be some stringent checks and balances before information about tax debt was allowed to be shared and IRD was consulting on those.
The proposal required:
●The debt to be significant and not disputed.
●Reasonable efforts had been made already to collect it.
●The taxpayer did not qualify for serious financial hardship relief, had been served a notice of intention to disclosure the information and given 30 days to pay the debt or arrange for repayment.
●Significant debt was determined, but could be debt overdue by a certain period, such as 18 months, and greater than a set percentage of income, assets, or non-tax liabilities or over a certain threshold.
Credit data bureau and collections agency Dun & Bradstreet was supportive of the push for New Zealand tax transparency.
Chief executive in Australia and New Zealand Simon Bligh said it was in everyone's interest to see where risk lay in the business communities so New Zealand companies were equipped with information to make the best commercial decisions.
‘‘While there are important privacy issues to consider, we see the proposals as an appropriate and much-needed balancing of public interest versus privacy,'' he said.
