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Vote Revenue - Finance and Government Administration Sector - The Estimates of Appropriations 2017/18 - Estimates 2017/2018

APPROPRIATION MINISTER(S): Minister of Revenue (M57)

APPROPRIATION ADMINISTRATOR: Inland Revenue Department

RESPONSIBLE MINISTER FOR INLAND REVENUE DEPARTMENT: Minister of Revenue

Overview of the Vote

The Minister of Revenue is responsible for appropriations in the Vote for the 2017/18 financial year covering the following:

  • a total of just under $666 million for departmental output expenses including investigations, management of debt and outstanding returns, policy advice, services to inform the public about entitlements and meeting obligations, services to other agencies, and services to process obligations and entitlements
  • a total of just under $222 million for departmental capital expenditure
  • a total of just under $3,871 million for non-departmental benefits or related expenses, mainly for tax credits, KiwiSaver payments and benefit payments such as child support and paid parental leave
  • a total of just over $12 million for non-departmental borrowing expenses, and
  • a total of $1,576 million for non-departmental other expenses, mainly for the impairment and write-off of debt.

The Minister of Revenue is also responsible for a total of just under $1,113 million for multi-year departmental other expenses for transformation.

The Minister of Revenue is also responsible for a capital injection of over $181 million to the Inland Revenue Department.

The Minister of Revenue is also responsible for Crown revenue and receipts in the Vote for the 2017/18 financial year covering the following:

  • a total forecast of $70,574 million for tax revenue
  • a total forecast of just under $1,153 million for non-tax revenue, and
  • a total forecast of $1,427 million for capital receipts.

Details of these appropriations are set out in Parts 2-4.

Details of Appropriations and Capital Injections

Annual and Permanent Appropriations

2016/172017/18
Titles and Scopes of Appropriations by Appropriation TypeFinal
Budgeted
$000
Estimated
Actual
$000
Budget
$000

Departmental Output Expenses

Investigations (M57)

This appropriation is limited to undertaking investigation, audit and litigation activities administered by Inland Revenue.
173,060170,677173,657

Management of Debt and Outstanding Returns (M57)

This appropriation is limited to activities to prevent returns becoming outstanding and debt becoming overdue, and to collect outstanding returns and overdue payments, whether for the Crown, other agencies or external parties.
148,286146,467148,301

Policy Advice (M57)

This appropriation is limited to the provision of advice, including second opinion advice and contributions to policy advice led by other agencies, to support decision-making by Ministers on government policy matters.
9,5049,0979,560

Services to Inform the Public About Entitlements and Meeting Obligations (M57)

This appropriation is limited to providing information and assistance to the public to make them aware of their obligations and entitlements. This also includes the provision of services to help Ministers fulfil their responsibilities to Parliament and the New Zealand public, other than policy decision-making responsibilities.
212,145209,871216,454

Services to Other Agencies RDA (M57)

This appropriation is limited to the provision of services by Inland Revenue to other agencies, where those services are not within the scope of another departmental output expense appropriation in Vote Revenue.
3,0602,4603,060

Services to Process Obligations and Entitlements (M57)

This appropriation is limited to both the registration, assessment and processing of tax obligations and other entitlements, including associated review and Crown accounting activities, and the collection and sharing of related information with other agencies.
108,859107,102114,502

Total Departmental Output Expenses

654,914645,674665,534

Departmental Other Expenses

Transformation (M57)

This appropriation is limited to the design and implementation of a modern system for tax revenue and social policy administered by Inland Revenue.
159,730130,930-

Total Departmental Other Expenses

159,730130,930-

Departmental Capital Expenditure

Inland Revenue Department - Capital Expenditure PLA (M57)

This appropriation is limited to the purchase or development of assets by and for the use of the Inland Revenue Department, as authorised by section 24(1) of the Public Finance Act 1989.
129,263106,000221,600

Total Departmental Capital Expenditure

129,263106,000221,600

Benefits or Related Expenses

Child Support Payments PLA (M57)

Child support payments to custodial persons who are not dependent on the state for financial support (expenses incurred pursuant to section 141 of the Child Support Act 1991).
279,000279,000291,000

Child Tax Credit PLA (M57)

Extra assistance for low to middle income families who are not dependent on the state for financial support (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
900900900

Family Tax Credit PLA (M57)

Family Support payments made to beneficiaries and non-beneficiaries during the year (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
1,763,0001,763,0001,823,000

In-Work Tax Credit PLA (M57)

Extra assistance for low to middle income families where the person works a minimum of 20 hours per week and does not have a partner, or a person and their partner work a minimum of 30 hours per week (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
566,000566,000561,000

KiwiSaver: Interest (M57)

To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006.
15,00013,00012,000

KiwiSaver: Tax Credit (M57)

To enable the payment of a tax credit to KiwiSaver members and the payment of residual tax credits to employers as set out in the Income Tax Act 2007.
793,000768,000798,000

Minimum Family Tax Credit PLA (M57)

Extra payment made to families where at least one parent is working for salary or wages (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).
13,00013,00012,000

Paid Parental Leave Payments (M57)

This appropriation is limited to Paid Parental Leave Payments made to parents in accordance with the Parental Leave and Employment Protection Act 1987.
287,000282,000338,000

Parental Tax Credit PLA (M57)

This appropriation is limited to expenses incurred on parental tax credit as provided for in subpart MD of the Income Tax Act 2007 and as authorised by section 185 of the Tax Administration Act 1994.
30,00030,00029,000

Payroll Subsidy PLA (M57)

This appropriation is limited to the payment of a subsidy to a payroll agent undertaking employers' payroll-related tax compliance activities on their behalf, section 185 of the Tax Administration Act 1994.
5,9005,9005,900

Total Benefits or Related Expenses

3,752,8003,720,8003,870,800

Non-Departmental Borrowing Expenses

Adverse Event Interest PLA (M57)

This appropriation is limited to interest on Adverse Event Income Equalisation Reserve accounts held by taxpayers in the farming and agriculture business, authorised by section 65ZH(1) of the Public Finance Act 1989.
404010

Environmental Restoration Account Interest PLA (M57)

This appropriation is limited to interest on Environmental Restoration accounts, authorised by section 65ZH(1) of the Public Finance Act 1989.
2,0002,0002,000

Income Equalisation Interest PLA (M57)

This appropriation is limited to interest on Income Equalisation Reserve Scheme accounts held by taxpayers in the farming, fishing or forestry industries, authorised by section 65ZH(1) of the Public Finance Act 1989.
8,0008,00010,000

Total Non-Departmental Borrowing Expenses

10,04010,04012,010

Non-Departmental Other Expenses

Impairment of Debt and Debt Write-Offs (M57)

This appropriation is limited to bad debt write-offs for Crown debt administered by Inland Revenue, excluding child support and student loans and to amounts relating to the impairment of this debt.
950,000750,000800,000

Impairment of Debt Relating to Student Loans (M57)

This appropriation is limited to the impairment of student loan debt.
143,00043,000100,000

Initial Fair Value Write-Down Relating to Student Loans (M57)

This appropriation is limited to the initial fair value write-down of student loans.
689,000670,000676,000

Impairment of Debt Relating to Child Support (M57)

This appropriation is limited to the impairment of child support debt.
5,000--

Total Non-Departmental Other Expenses

1,787,0001,463,0001,576,000

Total Annual and Permanent Appropriations

6,493,7476,076,4446,345,944

Multi-Year Appropriations

Type, Title, Scope and Period of AppropriationsAppropriations, Adjustments and Use$000

Departmental Other Expenses

Transformation (M57)

This appropriation is limited to the design and implementation of a modern system for tax revenue and social policy administered by Inland Revenue.

Commences: 01 July 2017

Expires: 30 June 2021
Original Appropriation1,112,607
Adjustments to 2015/16-
Adjustments for 2016/17-
Adjusted Appropriation1,112,607
Actual to 2015/16 Year End-
Estimated Actual for 2016/17-
Estimated Actual for 2017/18382,372
Estimated Appropriation Remaining730,235

Total Annual and Permanent Appropriations and Multi-Year Appropriation Forecasts

2016/172017/18
Final
Budgeted
$000
Estimated
Actual
$000
Budget
$000
Total Annual and Permanent Appropriations6,493,7476,076,4446,345,944
Total MYA Departmental Other Expenses Forecasts--382,372

Total Annual and Permanent Appropriations and Multi-Year Appropriation Forecasts

6,493,7476,076,4446,728,316

Capital Injection Authorisations

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Inland Revenue Department - Capital Injection (M57)58,11058,110181,600

Supporting Information

Part 1 - Vote as a Whole

1.1 - New Policy Initiatives

Policy InitiativeAppropriation2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Automatic Exchange of Information

Services to Process Obligations and Entitlements

Departmental Other Expenses
1,6802,6203,3002,7002,400

Departmental Capital Injections

Departmental Net Assets
3,0005,800---
Budget 2017 Family Incomes PackageFamily Tax Credit PLA
Non-Departmental Benefits or Related Expenses
-97,000371,000316,000308,000
In-Work Tax Credit PLA
Non-Departmental Benefits or Related Expenses
--2,0002,0002,000
Business tax package

Investigations

Departmental Output Expenses
270150100--

Management of Debt and Outstanding Returns

Departmental Output Expenses
1,620890630--

Services to Inform the Public About Entitlements and Meeting Obligations

Departmental Output Expenses
770420310--

Departmental Capital Injections

Departmental Net Assets
1,110----
Making Tax Simpler: Better Administration of PAYE and GSTPayroll Subsidy PLA
Non-Departmental Benefits or Related Expenses
-(1,700)(7,300)(8,100)(8,100)
Total Initiatives8,450105,180370,040312,600304,300

1.2 - Trends in the Vote

Summary of Financial Activity

2012/132013/142014/152015/162016/172017/182018/192019/202020/21
Actual
$000
Actual
$000
Actual
$000
Actual
$000
Final Budgeted
$000
Estimated
Actual
$000
Departmental
Transactions
Budget
$000
Non-
Departmental
Transactions
Budget
$000
Total
Budget
$000
Estimated
$000
Estimated
$000
Estimated
$000

Appropriations

Output Expenses628,213671,174667,100663,232654,914645,674665,534-665,534638,918556,122485,962
Benefits or Related Expenses3,711,1943,678,0473,708,8493,550,4773,752,8003,720,800N/A3,870,8003,870,8004,194,9004,187,9004,261,900
Borrowing Expenses7,8578,9085,1767,90710,04010,040-12,01012,01012,01012,01012,010
Other Expenses2,122,4852,075,3251,651,3941,414,0871,946,7301,593,930382,3721,576,0001,958,3721,831,5001,852,0601,806,675
Capital Expenditure48,94044,69132,38861,115129,263106,000221,600-221,600135,000134,00070,000
Intelligence and Security Department Expenses and Capital Expenditure-------N/A----
Multi-Category Expenses and Capital Expenditure (MCA)
Output Expenses------------
Other Expenses------------
Capital Expenditure------N/A-----

Total Appropriations

6,518,6896,478,1456,064,9075,696,8186,493,7476,076,4441,269,5065,458,8106,728,3166,812,3286,742,0926,636,547

Crown Revenue and Capital Receipts

Tax Revenue53,770,78856,207,96859,747,53963,401,69368,415,00068,415,000N/A70,574,00070,574,00073,734,00078,231,00081,768,000
Non-Tax Revenue1,469,7151,456,3831,152,5791,161,2921,128,5001,128,500N/A1,152,5001,152,5001,164,5001,171,5001,173,500
Capital Receipts1,246,0951,111,0281,388,8661,424,5191,358,5001,358,500N/A1,427,0001,427,0001,518,0001,595,0001,675,000

Total Crown Revenue and Capital Receipts

56,486,59858,775,37962,288,98465,987,50470,902,00070,902,000N/A73,153,50073,153,50076,416,50080,997,50084,616,500

Note - where restructuring of the vote has occurred then, to the extent practicable, prior years information has been restated as if the restructuring had occurred before the beginning of the period covered. In this instance Total Appropriations for the Budgeted and Estimated Actual year may not equal Total Appropriations in the Details of Appropriations and Capital Injections.

Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring

There have been no restructuring adjustments to prior year information in the Summary of Financial Activity table.

1.3 - Analysis of Significant Trends

Departmental Output Expenses

Departmental Output Expenses
 2017 2018  Estimated 666 million, 2018 2019  Estimated 639 million, 2019 2020  Estimated 556 million, 2020 2021  Estimated 486 million.
Source: Inland Revenue

Expenditure on departmental output expenses has increased from $628 million in 2012/13 to an estimated amount of just under $646 million in 2016/17 and a budgeted amount of just under $666 million in 2017/18.

Inland Revenue continues to focus on delivering operational initiatives to improve the efficiency of operations to meet demand for services and cost pressures. Expenditure growth in the years to 2017/18 is largely driven by initiatives such as the following:

  • the implementation of the child support scheme reform, property compliance package, business tax package, and Automatic Exchange of Information (AEOI) initiatives
  • additional audit and compliance activity
  • revenue investment
  • improving child support compliance
  • reducing unfiled returns, and
  • complying with the Foreign Account Tax Compliance Act (FATCA).

Expenditure on Inland Revenue's transformation programme is included in the section on Departmental Other Expenses.

Departmental Other Expenses

Departmental Other Expenses
 2017 2018  Estimated 382 million, 2018 2019  Estimated 252 million, 2019 2020  Estimated 267 million, 2020 2021  Estimated 212 million.
Source: Inland Revenue

The departmental other expenses category incorporates one multi-year appropriation for Inland Revenue's Business Transformation. This is a new appropriation effective from 1 July 2017 to 30 June 2021, and replaces the Transformation departmental other expense annual appropriation established in 2015/16.

This appropriation covers expenditure for the multi-year, business-led technology-enabled transformation of New Zealand's revenue system. As this is a multi-year appropriation, the amounts in 2017/18 to 2020/21 are indicative of the spend in each of the individual years within the overall appropriation.

The indicative spending increase in 2017/18 is a result of the implementation of a major part of Stage 2 of Business Transformation during the year. Stage 2 focuses on the delivery of all tax products in the new environment, except for GST which was successfully implemented in Stage 1 during 2016/17. In addition, it is planned that Stage 2 of Business Transformation will deliver the Accounting Income Method for calculating provisional tax and implement enabling technologies, capabilities and a new organisational model for Inland Revenue.

Non-Departmental Benefits or Related Expenses

Non-Departmental Benefitsor Related Expenses
 2017 2018  Estimated 3871 million, 2018 2019  Estimated 4195 million, 2019 2020  Estimated 4188 million, 2020 2021  Estimated 4262 million.
Source: Inland Revenue

Benefits or related expenses include appropriations for KiwiSaver, Working for Families Tax Credits, payroll subsidy, paid parental leave payments and child support payments to custodial persons.

An improving economy steadily increases KiwiSaver tax credit, child support payments to custodial persons, and paid parental leave payments. Conversely an improving economy reduces Working for Families entitlements as incomes grow.

Benefits or related expenses rise steadily through the forecast period, with the exception of the payroll subsidy. The payroll subsidy, previously $6 million per annum, ceases from 1 April 2018. Working for Families Tax Credits are significantly boosted from 1 April 2018 as a result of Budget 2017 policy changes. Income growth sees Working for Families entitlements decrease in 2019/20 relative to the previous year, but entitlements are expected to increase in the following year due to an expected indexation adjustment in April 2021.

Non-Departmental Borrowing Expenses

Non-Departmental Borrowing Expenses
 2017 2018  Estimated 12 million, 2018 2019  Estimated 12 million, 2019 2020  Estimated 12 million, 2020 2021  Estimated 12 million.
Source: Inland Revenue

Borrowing expenses include interest payments for the income equalisation, adverse event, and environmental restoration account schemes. The interest payable varies with the size of the deposits in these schemes. These schemes are designed to allow taxpayers to smooth income between tax years - either to smooth out variability in incomes or to set aside income to deal with an adverse event or provide for environmental restoration costs.

Actual results to date are variable and reflect deposit balances in the schemes. The forecast for interest expense in 2017/18 and future years reflects the expected level of the schemes' activity.

Non-Departmental Other Expenses

Non-Departmental Other Expenses
 2017 2018  Estimated 1576 million, 2018 2019  Estimated 1580 million, 2019 2020  Estimated 1585 million, 2020 2021  Estimated 1595 million.
Source: Inland Revenue

Non-departmental other expenses include bad debt write-offs, the initial fair value write-down on student loans, and impairments relating to student loans, child support, tax, KiwiSaver, and Working for Families Tax Credits debt.

The large reduction in 2014/15 resulted from both significantly lower than forecast debt impairment mainly due to a material fall in the overdue debt book and a change in recognising impairment relating to child support due to the transition from the previous accounting standards, NZ IFRS (PBE), to PBE IPSAS in the year ended 30 June 2015.

From 2016/17 the level of non-departmental other expenses stabilises.

Non-Departmental Tax Revenue

Non-Departmental Tax Revenue
 2017 2018  Estimated 70574 million, 2018 2019  Estimated 73734 million, 2019 2020  Estimated 78231 million, 2020 2021  Estimated 81768 million.
Source: Inland Revenue

Non-departmental tax revenue incorporates unconsolidated source deductions (PAYE), other persons' tax, fringe benefit tax, corporate tax including company tax, other direct income tax, GST and other indirect tax administered by Inland Revenue.

Total tax revenue is forecast to continue to grow over the next five years at an average rate of just over 5% per annum which is only marginally higher than the forecast growth in nominal GDP.

Taxes paid by individuals, eg, PAYE and other persons' tax, are forecast to grow more slowly than GDP, mainly due to changes to tax thresholds and tax credits announced in Budget 2017.

GST is the second largest tax type administered by Inland Revenue after PAYE and is forecast to, on average, grow in line with GDP.

Company tax is forecast to grow at a faster rate than GDP due to growth in taxable profits and the tightening of some tax rules applying to multi-national companies operating in New Zealand. An expected recovery in deposit interest rates from recent lows is forecast to increase resident withholding tax on interest income.

Non-Departmental Non-Tax Revenue

Non-Departmental Non-Tax Revenue
 2017 2018  Estimated 1153 million, 2018 2019  Estimated 1165 million, 2019 2020  Estimated 1172 million, 2020 2021  Estimated 1174 million.
Source: Inland Revenue

Non-departmental non-tax revenue incorporates child support collections from non-custodial parents, student loan interest unwind (interest income due to reversing the initial fair value write-down over the life of the loan), unclaimed monies, and interest and penalties on Working for Families Tax Credits debt.

The large reduction in 2014/15 reflected the change in recognising child support penalty revenue due to the transition from previous accounting standards, NZ IFRS (PBE), to PBE IPSAS. Under the new accounting standards, PBE IPSAS, child support penalty revenue is initially recognised at fair value.

Non-Departmental Capital Receipts

Non-Departmental Capital Receipts
 2017 2018  Estimated 1427 million, 2018 2019  Estimated 1518 million, 2019 2020  Estimated 1595 million, 2020 2021  Estimated 1675 million.
Source: Inland Revenue

Non-departmental capital receipts include student loan capital repayments and deposits into the adverse event income equalisation, income equalisation, and environmental restoration account schemes.

The decreases in 2013/14 and 2016/17 reflect lower income equalisation reserve scheme receipts. Receipts in this scheme are forecast to stabilise from 2017/18. The growth seen in 2017/18 and future years is attributable to higher forecast student loan capital repayments, which have a steadily increasing trend each year as incomes grow.

1.4 - Reconciliation of Changes in Appropriation Structure

Old StructureNew Structure
2016/17 Appropriations
in the 2016/17 Structure
2016/17
(Current)
$000
Appropriations to which
Expenses (or Capital
Expenditure) have been Moved from or to
Amount
Moved
$000
2016/17 Appropriations
in the 2017/18 Structure
2016/17
(Restated)
$000
2017/18
$000

Departmental Other Expenses

Transformation159,730Transferred to Transformation MYA(159,730)Transformation--
Transformation MYA-Transferred from Transformation159,730Transformation MYA159,730382,372
Total changes in Appropriations159,730-159,730382,372

From 2017/18 the Business Transformation funding has been moved to a new multi-year departmental other expense appropriation called Transformation MYA. The funding has been transferred from Transformation departmental other expense appropriation.

Explanations of the reasons for changing the appropriation structure are noted in the details of each appropriation in Parts 2-4.

Part 2 - Details of Departmental Appropriations

2.1 - Departmental Output Expenses

Investigations (M57)

Scope of Appropriation

This appropriation is limited to undertaking investigation, audit and litigation activities administered by Inland Revenue.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation173,060170,677173,657
Revenue from the Crown172,517172,517173,089
Revenue from Others543543568

What is Intended to be Achieved with this Appropriation

This appropriation is intended to protect the revenue base.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of customers whose compliance behaviour improves after receiving an audit intervention (see Note 1).

80%80%80%

Discrepancy identified for every output dollar spent.

$7.00$9.00$7.00

Percentage of litigation judgments found in favour of the Commissioner.

66%75%66%

Supporting measure

Percentage of audited customers who are satisfied with their experience (see Note 1).

70%72%70%

Note 1 - Actual performance measured using a sample of audit cases.

All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Revenue investment continuation2017/18-9,5849,5849,584-
Business tax package2016/17270150100--
Revenue investment2015/1616,60216,60216,60216,602-
Share of costs for Budget 2015 whole-of-government initiatives2015/16(340)(240)(180)(180)(180)
Cashing out research and development tax losses2014/15155119119119119
Property compliance initiative continuation2014/155,0005,0005,0005,0005,000

Management of Debt and Outstanding Returns (M57)

Scope of Appropriation

This appropriation is limited to activities to prevent returns becoming outstanding and debt becoming overdue, and to collect outstanding returns and overdue payments, whether for the Crown, other agencies or external parties.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation148,286146,467148,301
Revenue from the Crown145,689145,689145,680
Revenue from Others2,5972,5972,621

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the timely and efficient collection of revenue owed.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of returns filed by customers on time.

80%91%80%

Percentage of tax payments made by customers on time.

85%87%85%

Cash collected for every debt dollar spent.

$40.00$49.50$40.00

Value of assessed revenue for every outstanding return dollar spent.

$45.00$110.00$45.00

Percentage of child support assessments paid on time.

65%69%65%

Supporting measures

Percentage of growth in outstanding returns.

(2%) or less(10%)0% or less

Percentage of debt cases resolved within six months.

80%83%80%

Average cost of finalising an outstanding return.

$16.00-$18.00$13.80$16.00-$18.00

Percentage of collectable debt value over two years old.

60% or less44%60% or less

Percentage of debt value resolved for those who did not have a debt at the start of the year.

65%73%65%

Percentage of New Zealand liable parent child support debt cases resolved within 12 months.

75%78%75%

All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Revenue investment continuation2017/18-10,40010,40010,400-
Business tax package2016/171,620890630--
Share of costs for Budget 2015 whole-of-government initiatives2015/16(370)(260)(190)(190)(190)
Child support compliance2014/156,8286,7346,757--
Unfiled returns2014/157,1886,6756,675--
Property compliance initiative continuation2014/151,6501,6501,6501,6501,650
Student loans overseas-based borrowers compliance initiative continuation2014/154,8504,8504,8504,8504,850

Policy Advice (M57)

Scope of Appropriation

This appropriation is limited to the provision of advice, including second opinion advice and contributions to policy advice led by other agencies, to support decision-making by Ministers on government policy matters.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation9,5049,0979,560
Revenue from the Crown9,4839,4839,537
Revenue from Others212123

What is Intended to be Achieved with this Appropriation

This appropriation is intended to provide policy advice to support decision-making by Ministers on tax and social policy matters, to protect and maintain the integrity of the tax system while ensuring that our tax system is as simple as possible and is internationally competitive.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of ministerial satisfaction for policy advice.

80%80%80%

Percentage of sampled reports that meet quality standards (see Note 1).

75%75%75%

Average cost per hour of producing policy advice outputs.

$150.00 or less$130.00$150.00 or less

Note 1 - A quality score of 70% or better.

All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Services to Inform the Public About Entitlements and Meeting Obligations (M57)

Scope of Appropriation

This appropriation is limited to providing information and assistance to the public to make them aware of their obligations and entitlements. This also includes the provision of services to help Ministers fulfil their responsibilities to Parliament and the New Zealand public, other than policy decision-making responsibilities.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation212,145209,871216,454
Revenue from the Crown210,297210,297214,572
Revenue from Others1,8481,8481,882

What is Intended to be Achieved with this Appropriation

This appropriation is intended to provide services and information to help taxpayers and other customers meet their payment obligations and receive payments they are entitled to, and help Ministers fulfil their responsibilities to Parliament and the New Zealand public.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of customers who perceive that Inland Revenue does enough to inform them of their rights and obligations (see Note 1).

80%83%80%

Percentage of customers who perceive that resolving issues with Inland Revenue requires low effort (see Note 1).

80%80%80%

Percentage of overall customer satisfaction with the quality of Inland Revenue services to inform (see Note 1).

90%90%90%

Supporting measures

Percentage of telephone calls answered within two minutes.

75%70%75%

Average cost of a customer-initiated contact.

$35.00 or less$29.80$35.00 or less

Percentage of all rulings reports, adjudication reports and public items that meet the applicable purpose, logic, alternatives, consultation, and practicality standards.

100%100%100%

Number of published or finalised public items that give the Commissioner's interpretation of the law.

252525

Percentage of adjudication cases completed within three months of receipt.

90%95%90%

Percentage of taxpayer ruling applications that have a draft ruling completed within three months of receipt.

90%95%90%

Percentage of non-qualifying ruling applications that have a draft ruling completed within six months of receipt.

90%95%90%

Percentage of public items (including relevant public consultation) completed within 18 months of allocation.

90%85%85%

Percentage of submissions by the applicant on any draft ruling responded to within one month of receipt.

90%90%90%

Note 1 - Actual performance measured using a sample of the customer population.

All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Business tax package2016/17770420310--
Package for children living in material hardship2015/16115----
Share of costs for Budget 2015 whole-of-government initiatives2015/16(580)(400)(300)(300)(300)
Cashing out research and development tax losses2014/15619475475475475
Child support compliance2014/152,2762,2452,253--
Unfiled returns2014/153,0812,8612,861--
Paid parental leave payment2013/141313131313
Parental tax credit2013/14100100100100100

Services to Other Agencies RDA (M57)

Scope of Appropriation

This appropriation is limited to the provision of services by Inland Revenue to other agencies, where those services are not within the scope of another departmental output expense appropriation in Vote Revenue.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation3,0602,4603,060
Revenue from the Crown---
Revenue from Others3,0602,4603,060

What is Intended to be Achieved with this Appropriation

This appropriation is intended to provide support services to other government agencies, such as the provision of a hosted financial management information system and shared financial transactional services.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of satisfaction of the Department of Internal Affairs for services provided.

70%70%70%

Percentage of satisfaction of the New Zealand Productivity Commission for services provided.

70%70%70%

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Services to Process Obligations and Entitlements (M57)

Scope of Appropriation

This appropriation is limited to both the registration, assessment and processing of tax obligations and other entitlements, including associated review and Crown accounting activities, and the collection and sharing of related information with other agencies.

Expenses and Revenue

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation108,859107,102114,502
Revenue from the Crown87,73687,73693,368
Revenue from Others21,12322,52321,134

What is Intended to be Achieved with this Appropriation

This appropriation is intended to deliver efficient and effective processing of tax payments, tax credit claims, and refunds and other entitlements. This contributes to the availability of revenue to fund government programmes as well as ensuring that taxpayers and other customers receive payments they are entitled to.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Percentage of customers who perceive that Inland Revenue makes it easy for people to get it right (see Note 1).

75%82%75%

Percentage of social policy and tax registrations processed within five working days.

85%87%85%

Percentage of income tax disbursements issued within six weeks.

85%88%85%

Percentage of GST disbursements issued within four weeks (see Note 2).

95%96%95%

Supporting measures

Percentage of child support assessments issued within two weeks.

80%77%80%

Percentage of income tax returns finalised within four weeks.

90%93%90%

Percentage of GST returns finalised within three weeks.

95%99%95%

Percentage of employer monthly schedule employee deductions finalised within four weeks.

95%99%95%

Average cost of processing income tax returns, GST returns and employer monthly schedules.

$5.00 or less$2.17$4.00 or less

Percentage of notices and statements produced without error (see Note 1).

98.5%99%98.5%

Percentage of tax credit claim payments made within three weeks.

90%92%90%

Percentage of Working for Families Tax Credit (WfFTC) payments made on the first regular payment date following an application.

95%99%95%

Percentage of paid parental leave payments issued to customers on the first pay day following the agreed date of entitlement.

97%97%97%

Percentage of child support administrative review decisions issued within seven weeks.

85%79%85%

Note 1 - Actual performance measured using a sample of the customer population.

Note 2 - Section 46 of the Goods and Services Tax Act 1985 stipulates refunds are to be issued within 15 working days unless selected for a screening or investigation. The four weeks measure includes additional time for screening or investigation.

All performance measures will collectively cover the breadth of Inland Revenue's business (tax, social policy and KiwiSaver).

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Automatic Exchange of Information2016/171,6802,6203,3002,7002,400
Package for children living in material hardship2015/16115----
Share of costs for Budget 2015 whole-of-government initiatives2015/16(199)(127)(103)(103)(103)
Cashing out research and development tax losses2014/15774594594594594
Complying with the Foreign Account Tax Compliance Act2013/14992969969969969
Paid parental leave payments2013/145050505050
Parental tax credit2013/14400400400400400

2.2 - Departmental Other Expenses

Transformation (M57)

Scope of Appropriation and Expenses

Type, Title, Scope and Period of AppropriationsAppropriations, Adjustments and Use$000

Transformation (M57)

This appropriation is limited to the design and implementation of a modern system for tax revenue and social policy administered by Inland Revenue.

Commences: 01 July 2017

Expires: 30 June 2021
Original Appropriation1,112,607
Adjustments to 2015/16-
Adjustments for 2016/17-
Adjusted Appropriation1,112,607
Actual to 2015/16 Year End-
Estimated Actual for 2016/17-
Estimated Actual for 2017/18382,372
Estimated Appropriation Remaining730,235

Comparators for Restructured Appropriation

2016/172017/18
Vote, Type and Title of Appropriation Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Vote Revenue: Departmental Other Expense:
Transformation
159,730130,930-
Total159,730130,930-

What is Intended to be Achieved with this Appropriation

This appropriation is intended to design and implement a modern system for tax revenue and social policy administered by Inland Revenue that meets government priorities and responds to customers' changing expectations. This will lead to the more efficient collection of taxes and distribution of entitlements. It will also have wider benefits for New Zealand, including reduced compliance and operating costs, as well as the more agile delivery of policy changes in the future.

How Performance will be Assessed and End of Year Reporting Requirements

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Primary measures

Deliver new functionality to allow customers (or their agents) to self-manage their tax obligations.

N/AN/A30 April 2018

Accounting Income Method (AIM) regime operational in the new tax system (START).

N/AN/A30 April 2018

Migrate all tax products to the new tax system (START).

N/AN/A30 April 2018

Complete the stage 2 plan for implementing any further legislative changes (subject to Ministers' decisions).

N/AN/A30 April 2018

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Business transformation2015/16195,000226,000190,000156,00070,000

2.3 - Departmental Capital Expenditure and Capital Injections

Inland Revenue Department - Capital Expenditure PLA (M57)

Scope of Appropriation

This appropriation is limited to the purchase or development of assets by and for the use of the Inland Revenue Department, as authorised by section 24(1) of the Public Finance Act 1989.

Capital Expenditure

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural---
Land---
Property, Plant and Equipment13,00013,0008,000
Intangibles116,26393,000213,600
Other---

Total Appropriation

129,263106,000221,600

Significant Projects

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Business transformation91,13981,700199,800
Total91,13981,700199,800

What is Intended to be Achieved with this Appropriation

This appropriation is intended to invest in the renewal, upgrade and redesign of assets that support the delivery of the department's services. This includes the capital investment required for the implementation of Business Transformation.

How Performance will be Assessed and End of Year Reporting Requirements

Expenditure supports the delivery of the department's performance measures in accordance with the department's capital asset management priorities for 2017/18 which are:

  • implementation of Business Transformation (approximately 90%), and
  • maintain and improve business infrastructure including technology replacements and accommodation fit-outs (approximately 10%).

Business Transformation spending will be assessed against the performance measures agreed for the Transformation appropriation.

End of Year Performance Reporting

Performance information for this appropriation will be reported by Inland Revenue in the department's Annual Report 2018.

Reasons for Change in Appropriation

This appropriation increased by $92.337 million to $221.600 million in 2017/18 mainly due to planned capital expenditure for Business Transformation, which was approved by Cabinet in November 2015.

Capital Injections and Movements in Departmental Net Assets

Inland Revenue Department

Details of Net Asset Schedule2016/17
Estimated Actual
$000
2017/18
Projected
$000
Explanation of Projected Movements in 2017/18
Opening Balance273,134255,461
Capital Injections58,110181,600Capital transfer of $73.800 million from 2016/17 to 2017/18 to better align the funding with the implementation of Business Transformation. Capital injections of $102 million for Business Transformation which was approved by Cabinet in November 2015, and $5.800 million for the Automatic Exchange of Information (AEOI) initiative.
Capital Withdrawals(75,783)-
Surplus to be Retained (Deficit Incurred)--
Other Movements--

Closing Balance

255,461437,061

Part 3 - Details of Non-Departmental Appropriations

3.2 - Non-Departmental Benefits or Related Expenses

Child Support Payments PLA (M57)

Scope of Appropriation

Child support payments to custodial persons who are not dependent on the state for financial support (expenses incurred pursuant to section 141 of the Child Support Act 1991).

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation279,000279,000291,000

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for the transfer of child support payments from non-custodial parents to custodial persons.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for child support payments to custodial persons under the Child Support Act 1991. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Addressing child support legacy debt2015/169001,1001,100--
Child support compliance2014/1518,00018,00018,000--

Reasons for Change in Appropriation

The increase in 2017/18 reflects an increase in the number of child support cases as a result of general population growth, and forecast improvements to the labour market. The latter increases the amount collected from non-custodial parents and transferred to custodial persons, and it also decreases the likelihood that custodial persons are dependent on the state for financial support.

Conditions on Use of Appropriation

ReferenceConditions
Section 141 of the Child Support Act 1991On payment of money received by the Commissioner by way of child support to qualifying custodians, if the qualifying custodian of the child is not a recipient of a social security benefit.

Child Tax Credit PLA (M57)

Scope of Appropriation

Extra assistance for low to middle income families who are not dependent on the state for financial support (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation900900900

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to families with dependent children aged 18 or younger to help with day-to-day living costs.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for child tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Conditions on Use of Appropriation

ReferenceConditions
Subpart MZ of the Income Tax 2007Sets out the entitlement for and calculation of the Child Tax Credit.

Family Tax Credit PLA (M57)

Scope of Appropriation

Family Support payments made to beneficiaries and non-beneficiaries during the year (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation1,763,0001,763,0001,823,000

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to families with dependent children aged 18 or younger to help with day-to-day living costs.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for family tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Budget 2017 Family Incomes Package2017/18-97,000371,000316,000308,000
Package for children living in material hardship2015/16(31,510)(30,520)(28,550)(28,550)(28,550)

Reasons for Change in Appropriation

The family tax credit is payable to families with eligible children whose family income is below the relevant abatement cut-off point. The appropriation generally declines over time because income growth reduces entitlement for families with annual family incomes over the abatement threshold.

From 1 April 2018, family tax credit entitlements for children under 16 will increase to match the 16-18 year old entitlement rates. A partial offset occurs from an increase in the abatement rate from 22.5% to 25% and a reduction in the family income abatement threshold from $36,350 to $35,000. The abatement changes reduce entitlements for those on higher incomes. The combined changes will increase family tax credit entitlement from 1 April 2018, with a full year impact in the 2018/19 year.

Conditions on Use of Appropriation

ReferenceConditions
Subpart MD 3 of the Income Tax Act 2007Sets out entitlement for and calculation of the Family Tax Credit.

In-Work Tax Credit PLA (M57)

Scope of Appropriation

Extra assistance for low to middle income families where the person works a minimum of 20 hours per week and does not have a partner, or a person and their partner work a minimum of 30 hours per week (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation566,000566,000561,000

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to families who work the required hours each week and have dependent children aged 18 or younger to help with day-to-day living costs.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for in-work tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Budget 2017 Family Incomes Package2017/18--2,0002,0002,000
Package for children living in material hardship2015/16105,000100,00095,00095,00095,000

Conditions on Use of Appropriation

ReferenceConditions
Sections MD 4-10 of the Income Tax Act 2007Sets out the entitlement for and calculation of the In-Work Tax Credit.

KiwiSaver: Interest (M57)

Scope of Appropriation

To enable the payment of interest on KiwiSaver contributions as set out in the KiwiSaver Act 2006.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation15,00013,00012,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for interest payments to members on KiwiSaver contributions while they are held with Inland Revenue. Inland Revenue is required to hold members' contributions for three months from the date of the first contribution before transferring it to their KiwiSaver providers.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for KiwiSaver interest payments under the KiwiSaver Act 2006. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Reasons for Change in Appropriation

The interest appropriation for the 2017/18 year is lower than the previous year as a result of lower interest rates and an expected shorter holding period. This is offset to some extent by a stronger contribution base.

Conditions on Use of Appropriation

ReferenceConditions
Section 84-91 of the KiwiSaver Act 2006Interest payable by Inland Revenue on KiwiSaver member contributions while they are being held by Inland Revenue prior to being forwarded to KiwiSaver scheme providers.

KiwiSaver: Tax Credit (M57)

Scope of Appropriation

To enable the payment of a tax credit to KiwiSaver members and the payment of residual tax credits to employers as set out in the Income Tax Act 2007.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation793,000768,000798,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for an annual payment to contributing members aged 18 or over who meet the eligibility criteria encouraging participation in the KiwiSaver scheme.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for KiwiSaver tax credit payments under the KiwiSaver Act 2006. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Conditions on Use of Appropriation

ReferenceConditions
Part MK 1-8 of the Income Tax Act 2007Provides a tax credit for members up to a cap of $10 per week.

Minimum Family Tax Credit PLA (M57)

Scope of Appropriation

Extra payment made to families where at least one parent is working for salary or wages (expenses incurred pursuant to section 185 of the Tax Administration Act 1994).

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation13,00013,00012,000

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to families with dependent children aged 18 or younger to ensure that the annual income after tax of a family does not fall below $23,816 where at least one parent is working. 

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for minimum family tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Package for children living in material hardship2015/161,6001,8001,8001,8001,800

Conditions on Use of Appropriation

ReferenceConditions
Subpart ME of the Income Tax Act 2007Sets out the entitlement for and calculation of the Minimum Family Tax Credit.

Paid Parental Leave Payments (M57)

Scope of Appropriation

This appropriation is limited to Paid Parental Leave Payments made to parents in accordance with the Parental Leave and Employment Protection Act 1987.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation287,000282,000338,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for payments to eligible parents and adoptive parents when they take parental leave from their employment to care for their newborn or adopted child (under the age of six). These payments provide employment protected leave and compensate for the loss of income.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for paid parental leave payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Extending the duration of parental leave payments of preterm babies2015/163,4003,4003,4003,4003,400
Paid parental leave payments2014/1561,50063,90065,20065,20065,200

Reasons for Change in Appropriation

The increase in 2017/18 reflects wage increases raising the average entitlement and employment growth raising the volume of qualifying recipients.

Conditions on Use of Appropriation

ReferenceConditions
Part 7A of the Parental Leave and Employment Protection Act 1987Establishes the calculation for the payment of Paid Parental Leave Payments.

Parental Tax Credit PLA (M57)

Scope of Appropriation

This appropriation is limited to expenses incurred on parental tax credit as provided for in subpart MD of the Income Tax Act 2007 and as authorised by section 185 of the Tax Administration Act 1994.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation30,00030,00029,000

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to families with a newborn baby for the first 70 days (10 weeks) after the birth to help with day-to-day living costs.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for parental tax credit payments under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Package for children living in material hardship2015/16(490)(480)(450)(450)(450)
Parental tax credit2014/1513,00013,00013,00013,00013,000

Conditions on Use of Appropriation

ReferenceConditions
Sections MD 11-12 of the Income Tax Act 2007Sets out the entitlement for (MD 11) and calculation of (MD 12) the Parental Tax Credit.

Payroll Subsidy PLA (M57)

Scope of Appropriation

This appropriation is limited to the payment of a subsidy to a payroll agent undertaking employers' payroll-related tax compliance activities on their behalf, section 185 of the Tax Administration Act 1994.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation5,9005,9005,900

What is Intended to be Achieved with this Appropriation

This permanent appropriation provides for payments to payroll agents who undertake payroll services on behalf of small businesses so they can focus their efforts on growing their businesses.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the payment of a payroll subsidy under the Income Tax Act 2007. Performance information relating to the administration of the payment is provided under the Services to Process Obligations and Entitlements appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Making Tax Simpler: Better Administration of PAYE and GST2017/18-(1,700)(7,300)(8,100)(8,100)

Conditions on Use of Appropriation

ReferenceConditions
Section RP 4 of the Income Tax Act 2007Establishes the payment of a subsidy by the Commissioner to a listed PAYE intermediary for a payroll service that they provide to an employer (RP 4(1)). The calculation of the subsidy is specified in the Income Tax Act (Payroll Subsidy) regulations.

3.3 - Non-Departmental Borrowing Expenses

Adverse Event Interest PLA (M57)

Scope of Appropriation

This appropriation is limited to interest on Adverse Event Income Equalisation Reserve accounts held by taxpayers in the farming and agriculture business, authorised by section 65ZH(1) of the Public Finance Act 1989.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation404010

What is Intended to be Achieved with this Appropriation

This appropriation provides for interest payments on deposits held in an adverse event income equalisation scheme. This scheme allows farmers who experience adverse events to carry income from forced livestock sales over to the next income year.

Reasons for Change in Appropriation

After increased activity in 2016/17, the decrease in 2017/18 reflects an expectation that activity in the scheme will return to more typical levels, resulting in lower interest payments.

Environmental Restoration Account Interest PLA (M57)

Scope of Appropriation

This appropriation is limited to interest on Environmental Restoration accounts, authorised by section 65ZH(1) of the Public Finance Act 1989.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation2,0002,0002,000

What is Intended to be Achieved with this Appropriation

This appropriation provides interest payments on deposits held in an environmental restoration account. The environmental restoration account allows businesses to set aside money to cover restoration costs for monitoring, avoiding, remedying or mitigating the detrimental environmental effects which may occur in later years.

Income Equalisation Interest PLA (M57)

Scope of Appropriation

This appropriation is limited to interest on Income Equalisation Reserve Scheme accounts held by taxpayers in the farming, fishing or forestry industries, authorised by section 65ZH(1) of the Public Finance Act 1989.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation8,0008,00010,000

What is Intended to be Achieved with this Appropriation

This appropriation provides interest payments on deposits held in the income equalisation scheme. This scheme allows taxpayers in the farming, fishing, and forestry industries to make payments during the year to equalise income between different income years.

Reasons for Change in Appropriation

The increase in 2017/18 allows for potential volatility in the usage of the income equalisation scheme.

3.4 - Non-Departmental Other Expenses

Impairment of Debt and Debt Write-Offs (M57)

Scope of Appropriation

This appropriation is limited to bad debt write-offs for Crown debt administered by Inland Revenue, excluding child support and student loans and to amounts relating to the impairment of this debt.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation950,000750,000800,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for incurring the expense involved in the write-off of the Crown debt and for recognising an impairment loss to reflect the recoverable value of the Crown debt as at the end of a financial year, relating to tax, KiwiSaver, and Working for Families Tax Credits.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the impairment of debt and debt write-offs. Performance information relating to this expenditure is provided under the Management of Debt and Outstanding Returns appropriation.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Revenue investment continuation2017/18-(6,525)(6,525)(6,525)-
Small business tax package2016/17(14,000)(27,000)(53,000)(78,000)(100,280)
Revenue investment2015/1611,60111,60111,60111,601-
Unfiled returns2014/1519,69819,69815,758--

Reasons for Change in Appropriation

The decrease in 2017/18 reflects a material reduction in the overall level of overdue debt and hence impairment as these are inter-related.

Impairment of Debt Relating to Child Support (M57)

Scope of Appropriation

This appropriation is limited to the impairment of child support debt.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation5,000--

What is Intended to be Achieved with this Appropriation

This appropriation provides for incurring the expense involved in recognising an impairment loss to reflect the recoverable value of the total child support debt as at the end of the financial year.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the impairment of child support debt. Performance information relating to this expenditure is provided under the Management of Debt and Outstanding Returns appropriation.

Reasons for Change in Appropriation

The decrease in 2017/18 is due to a forecast change in the expected impairment.

Impairment of Debt Relating to Student Loans (M57)

Scope of Appropriation

This appropriation is limited to the impairment of student loan debt.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation143,00043,000100,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for incurring the expense to recognise an impairment loss and reflect the recoverable value of the total student loan debt at the end of a financial year.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the impairment of student loan debt. Performance information relating to this expenditure is available to the House of Representatives in the Student Loan Scheme Annual Report 2018.

Reasons for Change in Appropriation

The decrease in 2017/18 reflects an allowance based on the historical impairment which can be volatile.

Initial Fair Value Write-Down Relating to Student Loans (M57)

Scope of Appropriation

This appropriation is limited to the initial fair value write-down of student loans.

Expenses

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation689,000670,000676,000

What is Intended to be Achieved with this Appropriation

This appropriation provides for incurring the expense relating to reductions in the nominal value of new student loan lending to reflect the present value of that lending.

How Performance will be Assessed and End of Year Reporting Requirements

An exemption was granted under section 15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information is unlikely to be informative because this appropriation is solely for the initial fair value write-down of student loans. Performance information relating to this expenditure is available to the House of Representatives in the Student Loan Scheme Annual Report 2018.

Current and Past Policy Initiatives

Policy InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Annual maximum fee movement for 2017 and 20182016/171,5162,9713,2623,3803,380
Response to the Syrian refugee crisis: implementation2016/1734492512-
Delivering support to graduate-entry students affected by the 7 EFTS limit to complete long undergraduate programmes2015/16561797969627-
Investing to increase the number of engineering graduates2015/1644108477371990
Maintain the student allowance parental income threshold2015/164441,6232,5202,5202,520
Set the annual maximum fee movement to 3% for 20162015/16(4,960)(5,173)(5,363)(5,363)(5,363)
Supporting better pubic services and business growth within Vote Tertiary Education2015/161,6651,9652,0132,0132,013
Additional medical places2014/157691,2421,5521,6441,644
Extending the student support stand-down period for permanent residents2014/15(4,409)(4,409)(4,409)(4,409)(4,409)
Suspending the student loan repayment threshold until 1 April 20172014/15(11,132)(11,260)(11,260)(11,260)(11,260)
20 additional medical places2013/14513639676676676
Additional flexibility for highly performing private training establishments2013/144,8274,8274,8274,8274,827
Continue 99-105% tolerance bands2013/141,8931,8931,8931,8931,893
Reducing student allowances eligibility for students aged 40 and over2013/14783783783783783
Removing student allowances eligibility for those aged 65 and over2013/14(627)(627)(627)(627)(627)

Reasons for Change in Appropriation

The decrease in 2017/18 is due to macroeconomic changes impacting on the initial fair value ratio used to calculate the write-down. This calculation is compliant with and required by accounting standards, Public Benefit Entity International Public Sector Accounting Standards.