The 2023 CA ANZ/Tax Management New Zealand (TMNZ) Inland Revenue Satisfaction Survey has affirmed CA ANZ’s view regarding the increased compliance costs associated with the previous Government’s changes to the domestic trust disclosure and property taxation rules. Released in November, the survey’s findings painted a vivid picture of the challenges facing taxpayers affected by these rules. 

This year’s survey, with an increased number of respondents, focused on the services provided by Inland Revenue, and the cost of complying with the domestic trust disclosure requirements and the ever-evolving landscape of the property tax regime.

Trust disclosure rules

The resounding message from nearly all respondents was clear: compliance costs have taken a sharp upward turn due to the introduction of the trust financial reporting and disclosure rules. 
A striking 70% of members’ clients’ trusts were burdened with an estimated increase in cost of up to $1,000. 

CA ANZ NZ Tax Leader John Cuthbertson FCA said the survey results provided strong support for CA ANZ’s advocacy position that the Government’s tax legislation changes for trusts would inevitably drive-up compliance costs. In addition, the introduction of the domestic trust disclosure rules has added complexity to the tax return process for trusts. 

The CA ANZ tax team have been advocating for changes to lighten the compliance load for trustees of ‘small’ trusts. While some changes were enacted in March 2023 more could be done. It is also appropriate that priority be given to undertake a full post-implementation review of the trust disclosure rules.

During the 2022 tax return filing season, CA ANZ fielded numerous member queries. The common themes included: a lack of initial detailed guidance, the volume of information required, uncertainty regarding the value of and reason for the information requested, and the challenge of obtaining and compiling the data in the required format – not to mention system inflexibility. Responses in the survey also reflected these themes.

Bright-line test and interest limitation

Regarding property taxation, it's no surprise that respondents weighed in on the impact of the changes to the bright-line test and the residential property interest limitation rules which generally came into effect from 27 March 2021. The consensus was again clear – these changes have substantially increased compliance costs. In addition, 32% of respondents stated that the rules were very difficult to comply with. This is despite over 60% of respondents finding sufficient information and guidance available from Inland Revenue on these rules.

Inland Revenue services

When it comes to rating Inland Revenue's services, members’ and taxpayers’ perceptions of responsiveness have moved unfavourably compared to 2022. Waiting for information could be a test of patience with response times from Inland Revenue increasing from 2-5 days to 6 or more days. This would be unacceptable in a commercial environment.

It's not all bad news. When it comes to contacting Inland Revenue the most used channel is myIR. This finding shows that Inland Revenue’s strategy to move to a largely self-serve model through digital means has been successful.

Ratings on Inland Revenue’s phone service has also seen improvements. In the history of the CA ANZ/TMNZ survey, experience with this mode of contact has consistently scored low.  However, in 2023 it has improved. Not only has it risen to the ranks of the second most-used channel, but there has also been a notable positive shift in experience rating from survey respondents.

Finally, agent account managers remain in the top 3 of ways in which contact is made with Inland Revenue. This service is a key pillar of support for our members and continues to rate highly.