New Zealand: Measuring the many different ways we bring about compliance in New Zealand

New Zealand Inland Revenue (NZIR) has developed new ways to measure how we bring about compliance. This includes the work we do to make it easier for people to get things right, and the work we do finding and correcting where people have got it wrong.

At NZIR, we believe paying taxes and getting what customers are entitled to should be straight-forward. Our ‘Right from the Start’ approach to compliance supports this. We’re using data and analysis in new ways to make it easier for people to get things right, and harder to get them wrong – so we also need new ways to measure how we’re doing.

The new measures cover a range of activities we do to make sure customers are doing the right thing – from the one-to-many interventions that promote voluntary compliance to interventions that prevent revenue loss from occurring in the first place. The measures cover three key concepts:

·    Revenue Loss Prevention – all the prevention work we do to stop revenue loss. An  example of this is goods and services tax refund screening and other integrity review-related interventions that stop revenue leakage.

·    Future Revenue Benefit – while we already count the revenue we assess through our immediate interventions, we now also have a way to estimate what that means for future years too. Examples of these include monitoring the compliance behaviour of customers after a compliance intervention such as a compliance campaign or audit.

·    Revenue Assured – this is not a new concept, but being able to formally measure it is certainly new for NZIR. This category recognises the efforts we apply to provide upfront certainty to our customers such as our programme of advance pricing agreements (APAs) covering multinational enterprises. 

These new compliance measures have been piloted over the last 12 months and will be included in the upcoming NZIR Annual Report highlighting the value of our approach to compliance. In this regard, we have been able to identify $180m of additional revenue adjustments, $50m of future revenue benefits and almost half a billion dollars of tax assured through APAs.

The Compliance Return on Investment (ROI) measure will replace one of our long-standing external measures of audit intervention results. The new Compliance ROI recognises a wider range of compliance interventions, including audits, but better reflects our strategic compliance approach. It enables NZIR to show the value of real-time interventions and work to promote voluntary compliance along with enforcement actions - this helps recognise everyone’s contributions towards improving customer compliance, while providing valuable insights on the outcomes of all our compliance activities.