Paid Parental Leave - Information exchange between Inland Revenue and The Department of labour

2005 amendment allows taxpayer-specific information be shared between IR and the Department of Labour to investigate paid parental leave discrepancies.

Sections 81(4)(q), 85H and 85I of the Tax Administration Act 1994 and Schedule 3 of the Privacy Act 1993

The secrecy provisions have been amended to allow Inland Revenue to use taxpayer-specific information to identify applicants who may be ineligible to receive paid parental leave (PPL) or a parental tax credit, or who may have received an overpayment.

The amendments also allow Inland Revenue to communicate taxpayer-specific information to the Department of Labour so any discrepancies can be investigated and resolved.

Background

As part of the implementation of the PPL scheme in 2002, certain validation checks were developed using information collected as part of the administration of the tax system, to ensure that the scheme was not subject to misuse.  The checks were designed to indicate whether:

  • an employment relationship exists between a PPL applicant and the employer from whom the applicant claims to be taking leave;
  • an applicant returned to work for the employer from whom she claimed to be taking leave during the PPL payment period;
  • an applicant claimed, or made an application for, both PPL and the parental tax credit for the same child.

It transpired that Inland Revenue did not have the legislative authority to use information collected or obtained as part of the administration of the Revenue Acts, for PPL purposes.  The Parental Leave and Employment Protection Act 1987, which provides for the payment of PPL, is not a Revenue Act.  Inland Revenue has been delegated under the Parental Leave and Employment Protection Act aspects of the administration of the PPL scheme, such as processing applications and making payments.

Key features

New section 85H of the Tax Administration Act 1994 allows Inland Revenue to compare taxpayer-specific information with information provided by an applicant, to identify applicants who may be ineligible to receive PPL or who may have received an overpayment.  When these checks reveal a possible discrepancy, Inland Revenue can communicate taxpayer-specific information relating to the applicant to the Department of Labour for further investigation.

New section 85I allows Inland Revenue to compare taxpayer-specific information with information provided by an applicant, to identify applicants who have applied for a parental tax credit and PPL for the same child.  When someone has applied for both payments, Inland Revenue will decline the application for either PPL or the parental tax credit.

New section 81(4)(q) of the Tax Administration Act provides a specific exemption from the requirement that Inland Revenue maintain the secrecy of taxpayer information, for the purposes of section 85H of the Act.

Application date

The amendments apply from 21 June 2005, the date of enactment.