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Panel statement RAP 002: Process for resolving potential unintended legislative changes in the Income Tax Act 2007

Statement from the Rewrite Advisory Panel sets out the process for referral of unintended legislative changes in the Income Tax Act 2007.


  1. The Rewrite Advisory Panel (the Panel) is an independent committee formed to advise on the rewrite of the Income Tax Act 1994 (ITA 1994). The Panel's role includes considering whether any unintended legislative changes arise under the Income Tax Act 2007 (ITA 2007).
  2. In 2007 the Panel was further invited to monitor and report back to Ministers on the ITA 2007 and its continuing consistency with the objectives of the rewrite project.
  3. The Panel will consider all issues submitted, and make recommendations to Government on how any unintended changes should be dealt with.
  4. This Panel Statement sets out the process for taxpayers and agents to refer potential unintended legislative changes in the ITA 2007 to the Panel, and how the Panel will deal with those issues. This Panel Statement is not intended to amend any part of Rewrite Advisory Panel Statement 001, although it repeats some of the content of the earlier Panel Statement.
  5. Potential unintended legislative changes identified in the Income Tax Act 2004 (ITA 2004) can still be raised with the Panel. The process for making submissions on potential unintended legislative changes in the ITA 2004 is outlined in the Rewrite Advisory Panel Statement RAP 001, which can be found on the Rewrite Advisory Panel website.


  1. The ITA 2007 is the fourth and final stage of New Zealand's income tax legislation Rewrite programme which aims to make the legislation clear, plainly expressed and easy to understand. This will assist with understanding tax rights and obligations.
  2. The rewrite programme introduced the alphanumeric numbering system and set out the core provisions in the ITA 1994; progressively rewrote the provisions into plain language and restructured the provisions into a more logical scheme through the ITA 2004 and the ITA 2007.
  3. The intention of the drafting of the ITA was to ensure no change to the pre-existing law was made, except in respect of a limited number of intended policy changes specified in Schedule 51 of the ITA 2007.
  4. In 2003, the Finance and Expenditure Committee (FEC) noted that unintended changes in the law may arise from the difference in language between the old and new Acts, despite the best efforts of the drafters to avoid this.
  5. The FEC proposed the appointment of an independent committee to review submissions regarding any differences between the old and new Acts and to recommend appropriate action. The Rewrite Advisory Panel was invited to take on this role.
  6. A formal process was called for to identify such issues and refer them to the Government for consideration.
  7. Upon identification of an unintended legislative change, the Government will decide whether to:
    • enact an amendment to reinstate or modify the meaning of the pre-existing law, or
    • permit the unintended change to be retained in the legislation.
  8. The Government will also decide whether the issue merits wider consultation under the generic tax policy process, eg, whether a Government Discussion Document is warranted
  9. The Rewrite Advisory Panel is currently chaired by David McLay and includes representatives from the New Zealand Institute of Chartered Accountants (NZICA), the New Zealand Law Society (NZLS), The Treasury and Inland Revenue.

Panel secretariat and administration

  1. Inland Revenue's LTS Technical Standards unit performs a secretariat role to support the Panel. The Secretariat undertakes administrative functions and maintains a database and website dedicated to the process.
  2. LTS Technical Standards is an Inland Revenue business unit comprising solicitors and technical advisors.
  3. The Rewrite Advisory Panel website provides the main avenue for new issues to be submitted by taxpayers and agents, and for tracking the progress of each issue. Issues can also be submitted by post to the Panel at the address provided at paragraph 30.
  4. This website contains:
    • a description of the process
    • details of the Panel members
    • a register of issues and their status
    • an online submission form.
  5. Recommendations of the Panel and outcomes of the process will be communicated to the person raising the issue, on the website and through other channels, depending upon the significance of the issue.
  6. "Unintended legislative change issue" - this term is used in this Panel Statement to refer to the identification of an instance when the meaning of a provision in the ITA 2007 has potentially changed from the meaning of the corresponding provision in the ITA 2004 and is not included in the intended policy changes listed in Schedule 51 of the ITA 2007.
  7. The complexity of each issue and the volume of issues will influence the length of time needed to complete the process. It is acknowledged that timeliness is important and issues raised through this process will be treated expeditiously.
  8. Issues raised by Inland Revenue will also follow this process.
  9. Maintenance items such as corrections of cross-references, spelling and punctuation in the ITA 2004 or ITA 2007 are considered by Inland Revenue officials. These items are reported to the Panel but are not considered in detail by the Panel. They are generally incorporated into an available Amendment Bill. A summary of maintenance items can be found in the Maintenance Items Log on the Panel's website.

The process

  1. This section covers the following:
    • Overview
    • Submitting issues
    • Content/form of submissions
    • Inland Revenue analysis
    • The Panel process
    • Outcomes and communication
    • Penalties and interest
    • Disputes and rulings processes.


  1. A potential unintended legislative change issue can be referred to the Panel Secretariat. The Secretariat will refer all issues to the Panel and to Inland Revenue officials for their analysis and comment.
  2. Following Inland Revenue analysis, a report will be forwarded to the Panel to consider whether there is an unintended legislative change and to recommend a course of action. A copy of Inland Revenue's report will be made available to the submitter for their consideration and comment. The submitter may forward any comments to the Secretariat within 10 working days. If time is an issue, this should be raised with the Secretariat.
  3. Simple changes such as typographical errors or incorrect cross-references will also be brought to the Panel's attention, but it will not formally review these. (See paragraph 23.)
  4. Once the Panel has considered an issue it will make a recommendation to the Government. The Government will then determine the appropriate response to an unintended legislative change.

Submitting issues

  1. Potential unintended legislative change issues will come from a variety of sources, including:
    • Inland Revenue
    • taxpayers and their agents
    • NZICA or NZLS tax committees
    • any other interested persons.
  2. The Panel wants to ensure submitting issues for its consideration is straightforward. An issue can be submitted in the following ways:
    • by using the online form on the Rewrite Advisory Panel website.
    • by posting the appended form to:
      • Rewrite Advisory Panel Secretariat
        PO Box 2198
    • through the Tax Committees of NZICA and NZLS
    • through the websites of NZICA and NZLS.
  3. When received, each issue will be registered by the Secretariat, and an acknowledgement sent to the submitter. Concurrently the issue will be sent to the Panel.
  4. If a duplicate issue is received, the Secretariat will notify the submitter that the issue has already been raised and advise the status of the original issue. The Panel will be advised of duplications.

Content/form of submissions

  1. Each submission should include:
    • the section reference under the ITA 2007
    • the corresponding section reference under the ITA 2004
    • a brief interpretation of the ITA 2004 (or earlier legislation)
    • a brief interpretation of the corresponding provision under the ITA 2007
    • a reference to any policy and practice under the ITA 2004 (or earlier legislation)
    • practical examples of the effect of the change
    • the name and contact details of the submitter.
  2. Additional documentation may also be included to support your submission.
  3. A form for submissions is appended to this Panel Statement (see Appendix below).

Inland Revenue analysis

  1. The Secretariat will refer every issue to Inland Revenue's LTS Technical Standards unit for analysis.
  2. Inland Revenue analysis involves researching the provision affected, both in its pre- and post-rewrite forms, identifying the interpretation of the corresponding provision prior to the rewrite and establishing a view as to whether or not there has been a change in the law.
  3. Inland Revenue officials will also highlight their preferred means of resolving the matter.

The Panel process

  1. Submissions will be referred by the Secretariat to the Panel in a timely manner, along with a report from Inland Revenue officials setting out their analysis, options and recommendation for dealing with the issue - the timing of this will depend on the complexity of the issue.
  2. The Secretariat will forward a copy of Inland Revenue's report to the submitter and the submitter may make further comment to the Secretariat within 10 working days from the date the report is sent.
  3. The Panel will meet as required to consider the issues and, in particular, whether there has been an unintended change in the law through the rewrite process.
  4. If the Panel considers there has been an unintended change in the law, it will make a recommendation to the Minister of Revenue as to the appropriate course of action, eg, whether the ITA 2007 should be amended or whether the change should be retained.
  5. In some cases urgency may be required, eg, in the case of a dispute with Inland Revenue over the interpretation of the ITA 2007. If this is the case, the Panel is prepared to consider the matter expeditiously. Any need for urgency will need to be brought to the Secretariat's attention at the time an issue is submitted. In such cases it may be necessary to depart from the process outlined above.

Outcomes and communication

  1. When an unintended legislative change is confirmed by the Panel, it will make a recommendation to the Government as to the preferred resolution. However, ultimately it is the Government's decision.
  2. The Panel anticipates that the Government will decide to:
    • amend the ITA 2007 to reinstate the outcome given under the ITA 2004
    • permit the unintended change to be retained in the legislation, or
    • if the legislation is amended retrospectively, enact a savings provision to address the position of taxpayers who have relied on the unintended change.
  3. Given the circumstances of the case, the Government may also decide if the issue merits wider consultation, under the generic tax policy process, before any amendment is undertaken. The Government will also decide the application date of any amendment, and whether the Act will be amended retrospectively.
  4. Submitters will be notified directly of the outcome. The Panel's website will also record the outcome in the Issues Log.
  5. Inland Revenue will also publish the outcome of issues reviewed by the Panel in Inland Revenue's Tax Information Bulletin.

Penalties and interest

  1. This process does not remove the need for taxpayers to take care in preparing tax positions. The following paragraphs summarise the position proposed by the Commissioner.
  2. In most cases when interpreting a rewritten provision under the ITA 2007, taxpayers will be able to rely on existing interpretations of the corresponding ITA 2004 provision. If a taxpayer has taken an acceptable tax position, a taxpayer will not be liable to a shortfall penalty.
  3. If the meaning of the ITA 2007 is unambiguous, it should be applied, even if it appears that there has been an unintended change.
  4. However, if a taxpayer has not taken an acceptable tax position then a shortfall penalty will be imposed.
  5. Inland Revenue has provided more details on the treatment of penalties and interest arising from unintended legislative changes in Standard Practice Statement 08/03 published in the Tax Information Bulletin Vol 20, No 10 (December 2008).

Disputes and rulings processes

  1. The unintended legislative change process set out in this Panel Statement does not affect the operation of the disputes process or the rulings process. The unintended legislative change process sits alongside those statutory processes.
  2. In each case, taxpayers and Inland Revenue will need to consider whether commencement of a dispute could be delayed or continuation of a dispute be suspended while an issue is referred through this process. This process does not override existing legislative time-bar or response periods.
  3. Please note the ITA 2007 contains savings provisions that allow existing binding rulings to continue to apply.


Income Tax Act 2007 - Rewrite Advisory Panel Secretariat
Submission of Unintended Legislative Change Issue
Name of submitter:  
Firm name (where applicable):  
Is this an item for the Maintenance Items Log on the website? Yes No
Can we publish your name on the submission log? Yes No
Mailing address:  
Email address:  
Brief description of issue:  
Section/provision of the Income Tax Act 2007:  
Your interpretation of the section/provision under the 2007 Act:  
Section/provision of the Income Tax Act 2004 (or earlier legislation):  
Your interpretation under the 2004 Act (or earlier legislation):  
Policy and practice under the 2004 Act (or earlier legislation):  
Please provide practical examples to illustrate the effect of your submission:  
Please indicate if urgency is required and give reasons:  

Note: Supporting or explanatory material may be attached. The online form is on the Rewrite Advisory Panel website.