The New Zealand Government has opened for consultation a proposal to establish an approved information sharing agreement (AISA) between Inland Revenue (IR) and the Ministry of Business, Innovation and Employment (MBIE).
The proposal said that if information held by each agency was shared with the other it would allow them to “better discharge their functions and duties, save on costs and improve their efficiency”. Information sharing between the two agencies is not currently permitted within the scopes of the Tax Administration Act 1994 and the Privacy Act 2020.
The proposed agreement would also consolidate several limited memorandums of understanding (MoUs) already in place, streamline several processes and make system administration more efficient across tax, MBIE registers and criminal proceeds and insolvency regimes.
“The proposed AISA is expected to deliver the following benefits:
- Improving the administration and governance of the tax system, some MBIE administered registers, the criminal proceeds regime, and the insolvency regime.
- Enabling and co-operation on compliance and enforcement work, including:
- ensuring the efficient and effective prevention, detection, investigation, and prosecution of offences under the Crimes Act 1961 and legislation that either agency administers (where either agency has reasonable grounds to suspect that an offence has occurred, is occurring or will occur)
- ensuring that appropriate penalties and administrative sanctions are imposed on individuals and entities under legislation that either agency administers, and
- assisting with decision-making and collaboration on strategic approaches to compliance work and to enforcing the obligations of common customers.
- Allowing relevant information to be delivered to New Zealand businesses.
- Enabling the development of public policy (including potential costings and impact modelling for public policy proposals).”
The agreement is also expected to assist with the monitoring, detection and prevention of illegal business practices and conduct called ‘phoenixing’, where “company directors transfer the assets of a company to a new company at under market value, or simply leave the debts of the old company behind, with the intention of defeating the interests of creditors of the old company”.
“The lack of an agreement reduces agencies’ ability to provide targeted services to New Zealand businesses and assist in complying with their obligations. As Inland Revenue cannot currently share this information, these interventions cannot take place, leading to greater costs for both agencies. Businesses undergoing compliance activities would also incur extra costs if dealing with both agencies,” the consultation paper said.
“Another area where there are perceived benefits from information sharing is in public policy development. The agencies both develop policy that affects businesses operating in New Zealand. The agencies collect data to help inform the development of policy interventions. However, as each agency cannot access information held by the other, their ability to develop targeted policy interventions and accurately gauge the cost of new measures or their impact on business is limited.”
The various data points that are proposed to form part of the information sharing agreement between IR and MBIE include:
- IR to NZ Companies Office
- Register information
- Removal and restoration information
- Contact details
- Large company information
- IR to Criminal Proceeds, Integrity and Enforcement
- Information relevant to offences and the imposition of administrative sanctions or penalties
- Failed entity information
- Information concerning GST tax status
- IR to Insolvency and Trustee Service
- Information relevant to bankruptcies and company liquidations
- IR to business.govt.nz
- Entity information enabling direct communication with New Zealand businesses
- IR to Market Integrity Branch and Business and Consumer Branch
- Any of the information that can be shared under Categories 1 to 9 for the development of public policy
