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Taxpayer Rulings Unit

The Taxpayer Rulings Unit provides greater certainty about the application of tax laws and fosters higher levels of compliance with tax legislation by:

  • providing rulings on transactions, which allow taxpayers to enter into transactions with confidence as to the tax outcomes, and
  • applying an impartial and rigorous analysis of how the tax laws will apply
  • this is a fee-based service provided by the Commissioner. Taxpayer Rulings issues private, product and status rulings, which are the Commissioner's interpretations of the tax laws, and financial determinations which are formally binding on the Commissioner.

It is important that binding rulings, which bind the Commissioner for the period of their application, are technically correct and in accordance with the tax Acts and relevant case law. Staff, who are usually qualified solicitors, must thoroughly research the issues involved in the ruling application before a draft is prepared.

Drafts of private and product rulings are then discussed with the applicant to ensure that they correctly describe the arrangement on which the ruling has been requested.

Guide to binding rulings

Read our Guide to binding rulings (IR715) that was updated in June 2018.

Ruling application allocation guidelines

Introduction

Applications from taxpayers for binding rulings (private rulings, product rulings or status rulings) will be assigned to relevant business units within Inland Revenue handled by:

  • the Office of the Chief Tax Counsel (OCTC)
  • appropriate personnel within the Customer and Compliance Services group, or
  • jointly by OCTC and the Customer and Compliance Services group.

The criteria below form the basis for this allocation. This allocation is to be made on the basis of the technical issues contained within each ruling application, rather than on the basis of each application as a whole.

The allocation guidelines generally reflect the fact that OCTC is the final point of technical decision-making for the Department (particularly on matters that are complex or have a high level of uncertainty) and the business unit ultimately responsible under the escalation process for resolving internal inconsistencies on the correct application of the legislation.

These criteria are only for initial allocation purposes. It is possible that some of the matters referred to may only become apparent during the actual processing of the ruling application. However, once issues within an application have been allocated to a business group for processing, it shall be that business group's responsibility to process those and they shall not be reallocated unless there are exceptional circumstances.

In exceptional circumstances, or where this is necessary or highly desirable due to relative workload demands and available resources, with the approval of the Chief Tax Counsel the allocation of a particular application may vary from these guidelines.

Allocation guidelines

A Issues within applications having the following characteristics will be allocated to OCTC:
1. Significant issues concerning the ability of the Department to rule.
2. Raising issues where there is a significant absence of, or possible or perceived deficiency in, IRD policy.
3. Directly challenging an existing IRD policy or technical decision (whether this is based on new case law, or legislative change, or because the applicant regards the existing policy or decision to be legally incorrect).
4. Raising issues where there are unresolved differences of views within IRD business groups on the correct application of the legislation.
5. Raising issues where there is significant potential deficiency in, or unintended potential application or non-application of, specific legislative provisions.
6. Raising significant interpretation issues in relation to new legislation.
7. Raising issues or involving arrangements, having significant national implications, a wide precedential effect, or affecting an industry group.
8. Raising issues or an arrangement that are the same as, or similar to issues already being handled by the OCTC.
9. Issues within product rulings that are not related to one or more private ruling applications (subject to guideline 3. in part C below).
10. Raising legal or factual issues that are particularly sensitive, of significant public or political interest, or otherwise controversial.
11. Raising issues of the interpretation of an anti-avoidance provision where those issues or equivalent arrangements have not previously been ruled upon.
12. Raising issues where the issue(s) may require a financial arrangement determination.
13. Raising issues that have already been considered by the Customer and Compliance Services group as part of an indicative view.
14. Raising significant interpretation issues in relation to double tax agreements.
B Applications for a substantive ruling on sections GC 6 to GC 14 of the Income Tax Act 2007 or for Advance Pricing Agreements (APAs) by way of binding ruling, will be allocated to, and handled by, the International Audit Unit to the extent that they do not involve ruling on interpretative questions regarding the meaning of the statutory language.
C Issues within applications having the following characteristics may be allocated to either OCTC or Customer and Compliance Services group according to the particular nature of the issues or arrangement, the relative expertise or experience of personnel in the group, and/or available resources:
1. Involving complex factual and/or technical interpretative issues.
2. Raising issues regarding complex or specialised legislative provisions.
3. Issues within product rulings where the issues or equivalent arrangements have previously been ruled on.
4. Raising issues or facts that are the same as, or equivalent to, those considered previously by the group.
D Other issues within ruling applications (ie, not covered by the above criteria) will be allocated to, and handled by, the Customer and Compliance Services group.


 

Applications for special financial arrangement determinations are allocated to OCTC.

Defined category Definition
Active customer
  • a customer with any registered activity within a specific period, or
  • a salary and wage earner whose only relationship with Inland Revenue is having PAYE deducted and paid on their behalf within a specific period.
Adjudication categories

Adjudication cases are classified (depending on the degree to which the position of the Commissioner of Inland Revenue was upheld) into the following five categories:

  • decided fully for the Commissioner
  • decided mostly for the Commissioner but not the full amount or grounds/reasons
  • decided fully for the taxpayer
  • decided mostly for the taxpayer but not the full amount
  • decision unable to be reached on the amount of assessment.
Customers in debt

Any customers with overdue debt.

Entity type

A classification of customers based on their legal structure and tax obligations. These include companies, diplomatic missions, government departments, individuals, Māori authorities, partnerships, society/clubs, superannuation funds, trusts, unit trusts.

Filing channel

We distinguish between three types of filing channels:

  1. e-Filing (a system for registered tax agents to send and receive information electronically)
  2. paper-based filing, and
  3. web (online) filing.
Geographic area

Geographic areas are based on Inland Revenue district offices:

  • Auckland: Manukau, Takapuna
  • Rest of the North Island: Gisborne, Hamilton, Napier, New Plymouth, Palmerston North, Rotorua, Tauranga, Wellington, Whangarei
  • South Island: Christchurch, Dunedin, Greymouth, Invercargill, Nelson, Timaru
  • "Corporates" offices for customers not allocated to a specific geographic area

At an aggregate level district offices are combined into three major areas: Auckland, Rest of the North Island and South Island, as shown above.

GST turnover

GST turnover is calculated from GST returns as the sum of sales and income for the year ended 31 March.
For a two-monthly filer, this would mean the sum of gross sales on six successive GST returns, with the last return being for the period ending 31 March.
The GST tables only include GST collected or refunded by Inland Revenue. GST collected on imports by the New Zealand Custom Service is not included.

Individual

Customers not registered for GST or PAYE and not belonging to large enterprises (LE) or non-profit organisations (NPO).

Notes

  • This includes individual customers receiving income from business (eg rental property, shares) but not registered for GST or PAYE.
  • Where there are overlaps between LE, NPO, SME and individuals, entities are allocated to the group according to the following order of priority. The priorities are:
    • large enterprises (LE)
    • non-profit organisations (NPO)
    • small and medium enterprises (SME)
    • individuals
Large enterprise (LE)
  • a non-individual entity which by itself or as a part of a business group has an annual turnover exceeding $100 million (calculated based on GST101 returns), or
  • 2. an entity belonging to specialist segments as follows:
    • financial
    • high-wealth individuals
    • manufacturing
    • non-resident entertainers
    • non-resident contractors
    • resources
    • services
Liable parent (formerly non-custodial or paying) A parent of a qualifying child who is normally required to pay child support.
Non-profit organisation (NPO)

All entities exempted from income tax and not belonging to large enterprises with the following exemption types:

  • society/club income < $1000
  • amateur sports clubs
  • charity
  • dairy herd society
  • district societies
  • scientific and industrial research
  • veterinary service clubs, or
  • all entities except building societies and friendly societies with "other" exemption type.
Overdue child support debt

The amount of an employer's or a liable parent's liability which is in arrears (due, but not paid), together with overdue receiving carer overpayments.

Notes:

  • child support debt excludes debt we collect on behalf of overseas agencies
  • this amount includes any penalties applied to the debt. Note that only the overdue penalties component is recognised as a debt from the Crown perspective.
Overdue debt case age The length of time the debt has been overdue.
Overdue debt element A specific tax type and period for which a debt is due. A customer can have one or more debt elements.
Overdue student loan debt

The amount of repayment obligation for a tax year that is overdue.

Notes:

  • the definition applies to both residents and overseas based borrowers
  • this amount includes any penalties applied to the debt.
Overdue tax debt the amount of tax that remains unpaid after the due date for payment. Overdue tax debt includes any penalty and interest applied to the debt.
Overdue Working for Families Tax Credits debt When recipients are paid more than their entitlement and they don't repay it by the due date a debt arises. The amount includes any penalty and interest applied to the debt.
Payroll giving A scheme which allows employees to donate money to an approved donee organisation (an organisation that has Inland Revenue-approved donee status) of their choice by having a deduction taken direct from their gross pay and receive immediate tax credits that reduce their PAYE payable.
Only employers who electronically file their employer monthly schedule and deduction form can choose to offer payroll giving to their employees.
Percentage of payments made on time The percentage of late payments to the total number of payments per tax year.
Percentage of returns filed on time The percentage of late filings to the total number of filings per tax year.
Receiving carer (formerly custodial parent) A parent or carer of a qualifying child who is normally entitled to receive child support from a liable parent. They must have at least 35% care to receive child support.
Registered customer Registered customers include all customers registered with Inland Revenue, either individuals or entities. Registered customers include some entities and people no longer active.
Revenue collected Revenue collected includes only taxes and duties collected by Inland Revenue. GST collected by the New Zealand Customs Service is excluded. Numbers are unconsolidated.
Note: The Treasury publishes monthly financial statements prepared on a consolidated basis, meaning they eliminate tax transactions between departments, state-owned enterprises and Crown entities./td>
Revenue collected from liable parents (formerly non-custodial or paying) Revenue collected from liable parents includes all revenue collected during each tax year by Inland Revenue including payments related to other time periods.
Shortfall penalty A penalty imposed as a percentage of a tax shortfall (a deficit or understatement of tax), resulting from certain actions on the part of a taxpayer. Shortfall penalties apply to most taxes and duties, including student loans, but not to child support repayments by liable parents.
The law divides these actions into five categories of fault or breach, with a specified penalty rate for each category. The severity of the penalty increases in proportion to the seriousness of the breach: Not taking reasonable care (20%), Unacceptable tax position 20%, Gross carelessness (40%), Abusive tax position (100%), Evasion (150%).
Small and medium enterprise (SME)
  • all entities with an active relationship for GST or PAYE that do not belong to large enterprises or non-profit organisations, and
  • all non-individual entities without active registration for GST or PAYE not belonging to non-profit organisations.
Source deductions Source deductions include:
  • PAYE (pay as you earn), and
  • ESCT (employer superannuation contribution tax), and
  • SSCWT (formerly known as the specified superannuation contributions withholding tax).
Tax agent A tax agent prepares the annual returns of income for 10 or more customers in one of the following ways:
  • a practitioner carrying on a professional public practice
  • a person carrying on a business or occupation in which returns of income are prepared, or
  • a Māori Trustee.
Taxable income Taxable income for individuals is income on which their personal income tax is assessed for the March year.
For people with IR3 tax returns or Personal tax summaries, this is income from all taxable sources less allowable deductions and losses. People with negative income because of losses are recorded as having nil taxable income in the tables. For people who are non-filers, taxable income is deemed to be their total PAYE gross earnings in the year ended 31 March. PAYE gross earnings can include income from employment, and also taxable welfare benefits, New Zealand Superannuation, earnings-related ACC, student allowances, and paid parental leave.
Weighted overdue debt case age The average age of the case elements weighted by their dollar value.
Working for Families Tax Credits The Working for Families Tax Credits (WfFTC) consists of the following credit types:
  • FTC - family tax credit
  • IWTC - in-work tax credit replaced child tax credit from April 2006. Customers who received child tax credit before 1 April 2006 and don't qualify for in-work tax credit may continue to receive child tax redit
  • MFTC - minimum family tax credit
  • PTC - parental tax credit.
Note 1: WfFTC was collectively known as "family assistance."
Note 2: CTC - child tax credit. There are a very small number of people who receive this tax credit but because their numbers are now so few; they are no longer reported on separately.
Note 3: This includes Best Start tax credits
Defined category Definition
Active customer
  1. A customer with any registered activity within a specific period, or
  2. a salary and wage earner whose only relationship with Inland Revenue is having PAYE deducted and paid on their behalf within a specific period.
Defined category Definition
Adjudication categories

Adjudication cases are classified (depending on the degree to which the position of the Commissioner of Inland Revenue was upheld) into the following five categories:

  1. decided fully for the Commissioner
  2. decided mostly for the Commissioner but not the full amount or grounds/reasons
  3. decided fully for the taxpayer
  4. decided mostly for the taxpayer but not the full amount
  5. decision unable to be reached on the amount of assessment.
Defined category Definition
Customers in debt

Any customers with overdue debt.

Defined category Definition
Entity type

A classification of customers based on their legal structure and tax obligations. These include companies, diplomatic missions, government departments, individuals, Māori authorities, partnerships, society/clubs, superannuation funds, trusts, unit trusts.

Defined category Definition
Filing channel

We distinguish between three types of filing channels:

  1. e-Filing (a system for registered tax agents to send and receive information electronically)
  2. paper-based filing, and
  3. web (online) filing.
Defined category Definition
Geographic area
  1. Geographic areas are based on Inland Revenue district offices:
    1. Auckland: Manukau, Takapuna
    2. Rest of the North Island: Gisborne, Hamilton, Napier, New Plymouth, Palmerston North, Rotorua, Tauranga, Wellington, Whangarei
    3. South Island: Christchurch, Dunedin, Greymouth, Invercargill, Nelson, Timaru
    4. "Corporates" offices for customers not allocated to a specific geographic area.
  2. At an aggregate level district offices are combined into three major areas: Auckland, Rest of the North Island and South Island, as shown above.
Defined category Definition
GST turnover

GST turnover is calculated from GST returns as the sum of sales and income for the year ended 31 March.
For a two-monthly filer, this would mean the sum of gross sales on six successive GST returns, with the last return being for the period ending 31 March.
The GST tables only include GST collected or refunded by Inland Revenue. GST collected on imports by the New Zealand Custom Service is not included.

Defined category Definition
Individual

Customers not registered for GST or PAYE and not belonging to large enterprises (LE) or non-profit organisations (NPO).

Notes:

  1. This includes individual customers receiving income from business (eg, rental property, shares) but not registered for GST or PAYE.
  2. Where there are overlaps between LE, NPO, SME and individuals, entities are allocated to the group according to the following order of priority. The priorities are:
    1. large enterprises (LE)
    2. non-profit organisations (NPO)
    3. small and medium enterprises (SME)
    4. individuals.
Defined category Definition
Large enterprise (LE)
  1. A non-individual entity which by itself or as a part of a business group has an annual turnover exceeding $100 million (calculated based on GST101 returns), or
  2. an entity belonging to specialist segments as follows:
  • Crown
  • financial
  • high-wealth individuals
  • manufacturing
  • non-resident entertainers
  • non-resident contractors
  • resources
  • services.
Defined category Definition
Liable parent (formerly non-custodial or paying)

A parent of a qualifying child who is normally required to pay child support.

Defined category Definition
Non-profit organisation (NPO)

All entities exempted from income tax and not belonging to large enterprises with the following exemption types:

  • society/club income < $1000
  • amateur sports clubs
  • charity
  • dairy herd society
  • district societies
  • scientific and industrial research
  • veterinary service clubs, or
  • all entities except building societies and friendly societies with "other" exemption type.
Defined category Definition
Overdue child support debt

The amount of an employer's or a liable parent's liability which is in arrears (due, but not paid), together with overdue receiving carer overpayments.

Notes:
 

  1. Child support debt excludes debt  we collect on behalf of overseas agencies.
  2. This amount includes any penalties applied to the debt. Note that only the overdue penalties component is recognised as a debt from the Crown perspective.
Defined category Definition
Overdue debt case age

The length of time the debt has been overdue.

Defined category Definition
Overdue debt cases

A debt case is created when a due date for payment has passed without full payment being made. Other overdue debt elements may be added as they become overdue. The case will close when all overdue debt has been fully resolved.

Defined category Definition
Overdue debt element

A specific tax type and period for which a debt is due. A customer can have one or more debt elements.

Defined category Definition
Overdue student loan debt

The amount of repayment obligation for a tax year that is overdue.

Notes:

  1. The definition applies to both residents and overseas based borrowers.
  2. This amount includes any penalties applied to the debt.
Defined category Definition
Overdue tax debt

The amount of tax that remains unpaid after the due date for payment. Overdue tax debt includes any penalty and interest applied to the debt.

Defined category Definition
Overdue Working for Families Tax Credits debt

When recipients are paid more than their entitlement and they don't repay it by the due date a debt arises. The amount includes any penalty and interest applied to the debt.

Defined category Definition
Payroll giving

A scheme which allows employees to donate money to an approved donee organisation (an organisation that has Inland Revenue-approved donee status) of their choice by having a deduction taken direct from their gross pay and receive immediate tax credits that reduce their PAYE payable.

Only employers who electronically file their employer monthly schedule and deduction form can choose to offer payroll giving to their employees.

Defined category Definition
Percentage of payments made on time

The percentage of late payments to the total number of payments per tax year.

Defined category Definition
Percentage of returns filed on time

The percentage of late filings to the total number of filings per tax year.

Defined category Definition
Receiving carer (formerly custodial parent)

A parent or carer of a qualifying child who is normally entitled to receive child support from a liable parent. They must have at least 35% care to receive child support.

Defined category Definition
Registered customer

Registered customers include all customers registered with Inland Revenue, either individuals or entities. Registered customers include some entities and people no longer active.

Defined category Definition
Revenue collected

Revenue collected includes only taxes and duties collected by Inland Revenue. GST collected by the New Zealand Customs Service is excluded. Numbers are unconsolidated.

Note: The Treasury publishes monthly financial statements prepared on a consolidated basis, meaning they eliminate tax transactions between departments, state-owned enterprises and Crown entities.

Defined category Definition
Revenue collected from Liable parents (formerly non-custodial or paying)

Revenue collected from liable parents includes all revenue collected during each tax year by Inland Revenue including payments related to other time periods.

Defined category Definition
Shortfall penalty

A penalty imposed as a percentage of a tax shortfall (a deficit or understatement of tax), resulting from certain actions on the part of a taxpayer. Shortfall penalties apply to most taxes and duties, including student loans, but not to child support repayments by liable parents.

The law divides these actions into five categories of fault or breach, with a specified penalty rate for each category. The severity of the penalty increases in proportion to the seriousness of the breach: Not taking reasonable care (20%), Unacceptable tax position 20%, Gross carelessness (40%), Abusive tax position (100%), Evasion (150%).

Defined category Definition
Small and medium enterprise (SME)
  1. All entities with an active relationship for GST or PAYE that do not belong to large enterprises or non-profit organisations, and
  2. all non-individual entities without active registration for GST or PAYE not belonging to non-profit organisations.
Defined category Definition
Source deductions

Source deductions include:

  1. PAYE (pay as you earn), and
  2. ESCT (employer superannuation contribution tax), and
  3. SSCWT (formerly known as the specified superannuation contributions withholding tax).
Defined category Definition
Tax agent

A tax agent prepares the annual returns of income for 10 or more customers in one of the following ways:

  • a practitioner carrying on a professional public practice
  • a person carrying on a business or occupation in which returns of income are prepared, or
  • a Māori Trustee.

A tax agent must be a registered Inland Revenue customer.

Defined category Definition
Taxable income

Taxable income for individuals is income on which their personal income tax is assessed for the March year.
For people with IR3 tax returns or Personal tax summaries, this is income from all taxable sources less allowable deductions and losses. People with negative income because of losses are recorded as having nil taxable income in the tables. For people who are non-filers, taxable income is deemed to be their total PAYE gross earnings in the year ended 31 March. PAYE gross earnings can include income from employment, and also taxable welfare benefits, New Zealand Superannuation, earnings-related ACC, student allowances, and paid parental leave.

Defined category Definition
Weighted overdue debt case age

The average age of the case elements weighted by their dollar value.

Defined category Definition
Working for Families Tax Credits

The Working for Families Tax Credits (WfFTC) consists of the following credit types:

  • FTC - family tax credit
  • IWTC - in-work tax credit replaced child tax credit from April 2006. Customers who received child tax credit before 1 April 2006 and don't qualify for in-work tax credit may continue to receive child tax credit
  • MFTC - minimum family tax credit
  • PTC - parental tax credit.

Note 1: WfFTC was collectively known as "family assistance".

Note 2: CTC - child tax credit. There are a very small number of people who receive this tax credit but because their numbers are now so few; they are no longer reported on separately.