The draft interpretation statement sets out the foundational requirements for all shortfall penalties under sections 141A–141E of the Tax Administration Act 1994. It explains what constitutes a “tax position”, when a “tax shortfall” arises, which tax types are covered, and how shortfalls are calculated. The statement covers the broad definition of “tax position”, the scope of penalties (including income tax, GST, tax credits, employer obligations, and KiwiSaver deductions), and the calculation of tax shortfalls using marginal rates or lowest applicable rates. It also details special rules for offsets, aggregation, associated persons, and the threshold mechanics for the unacceptable tax position penalty. The statement is supported by numerous practical examples and is designed to be read alongside penalty specific statements and the reductions/other matters guidance.

CA ANZ supports the publication of this statement, noting that it is comprehensive and provides clear, practical guidance for taxpayers and advisors.

CA ANZ suggests some clarifications to further enhance the statement and offers additional recommendations to strengthen the accompanying draft Fact Sheet.