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John Cuthbertson and I discuss the role of CAANZ’s tax team, GTPP and the latest tax bill

John Cuthbertson and I discuss the role of CAANZ’s tax team, GTPP and the latest tax bill

28 Oct, 2025 | The Week in Tax

My guest this week is John Cuthbertson, FCA from Chartered Accountants Australia and New Zealand, (CAANZ). Since 2017, John has led the New Zealand tax team responsible for engaging with Inland Revenue, Treasury, Government and Opposition MPs on tax law reform, policy settings and administration. He joins us today to discuss CAANZ’s public role in advocacy, the Generic Tax Policy Process, and the new tax bill released last month and how to make effective submissions. Welcome, John. Thank you for joining us.

John
Thank you for having me, Terry.

TB
Not at all. Been a pleasure to bring you on. I’ve been looking to do so for some time. So, tell us a little bit about your specific role with CAANZ, the size of your team and how it plays out.

CAANZ’s tax advocacy team & role

John
We’re a perfectly formed small team, TB. We have 2.3 full-time equivalents in terms of senior tax advocacy roles, which basically means that my three staff work part-time. And with that, there’s myself and a member knowledge specialist who’s responsible for our newsletters and our digital side of things. We amplify what we do or work with our tax advisory group, which is broadly put together from a cross-section of chartered accountants in New Zealand, from public practice through to commerce and academia. And they work closely with us for the various submissions we put out each year. We do advocate in the public interest, which really means free from sectorial bias and what’s good for New Zealand Inc, what’s good for the taxpayers, but also at a higher level, what’s good for the tax system as a whole.

TB
You would be constantly talking with Inland Revenue and policy officials on a number of things at any one time, generally. Would that be the case?

John
We have regular meetings. We meet on a fortnightly basis for a half hour catch up, if you like. But we’re not just advocating on the tax policy that is coming through. We also submit on all of the draft public rulings, and we look at the various documents that come out for taxpayers to complete each year. We’re providing input into all of that. We did 60 submissions in the year ended 30 June, just gone. That’s a huge commitment.

TB
So much stuff is pushed out by Inland Revenue, I can’t possibly cover it in the podcast. I pick up stuff with those major interpretation statements, at least one or two a month, and then basically smaller rulings, et cetera. So the volume of work your team works through is phenomenal.

John
Yes, last week alone, we had five submissions due on Friday.

Submissions on tax bills

TB
So you’re doing submissions, and you’ve talked earlier about that process in relation to rulings, interpretation statements. But then every so often, twice a year, we get a big tax bill that’s dropped on us sometimes.  What happens then? Because we’ve got the current one, the Taxation (Annual Rates for 2025-26 Compliance, Simplification, and Remedial Measures) Bill.

And this is obviously where your team will be very busy now because submissions are due by October 23rd. And am I right in thinking you’ll make a written submission, which will be quite substantial, over 100 pages? I think that’s not uncommon, but you’ll also appear in front of the Finance and Expenditure Committee to talk through particular points.

John
Yes. We definitely do a written submission and it’s not uncommon for our submissions to get to about 160 pages. And that submission, we’re somewhat unique in that we submit on virtually the whole of the bill. There’ll be areas where we can’t add any value to, we recognise that, but we generally try to submit on the majority of the bill. And the reason we do that is because it sort of sets it up as, it sounds a bit rude, the sort of centrepiece submission in a way. In the sense that that’s what the committee use because we summarise the main clauses of the bill, and then what we do is we put forward our view and backup for it in terms of a set out.

Officials and MPs can use our submission as sort of a non-biased opinion on the bill if you like, so that they’ve got a document, and we purposely set it out so that they can print it off and write their notes between the margins. We’ve left all that space for them because that’s what they told us they wanted.

Appearing before the Finance and Expenditure Committee

That’s the written process. And then usually within about a week of the bill being due, the written submission, you then appear before the Finance and Expenditure Committee. That’s at your option, but we always take that option. And then you get between 10 and 15 minutes, just like any other submitter, to make your points.

So usually when we go along to that phase, we’re very selective. And by that stage, having gone for a massive submission process, there’ll be four or five key issues that stand out for their own reasons. And we will pick two of those areas and take that to the committee on the day. And we’re usually one of the first to submit, so that’s quite nice. And then we get to go through, and they’ll ask questions. And then if you’re really unlucky, they’ll ask questions about things you haven’t actually talked about, which can get a lot more complicated.

But it’s a very good process. And to be fair, you don’t want surprises coming up at that stage because it’s sort of too late. You really want most of the things to be known. And the time against the select committee, ideally, it would be a no surprises basis. But unfortunately, there are often things that need to be dealt with.

What about Amendment Papers?

TB
So, for example, let’s say something unusual happens between now and October, they may drop in an Amendment Paper [previously a Supplementary Order Paper]?  These can be controversial because sometimes they come in, and no one’s had a chance to submit on them. These Amendments tend to find themselves getting amended further on down the track because they haven’t gone through that consultation process. Or am I being unfair on the process?

John
I think it depends on the amendment, TB, and the problem you have is there’s a huge variation in what those amendments can be. In some cases, the amendment that gets put in later simply because they ran out of runway for the bill, which has to be completed by a certain time. But they’ve still done the majority of the work, and they do the extra work to bring it in. And it depends when it comes in on the process of the readings of the bills as to how much public scrutiny it does get.

A clarification or a change in the law?

If it comes in at the very end, then it gets no scrutiny. But if it comes in slightly earlier, there will be scrutiny. I’m more concerned about the things they call clarifications, because quite often they’re not. Clarifications can often be a change in the law. That’s probably what more concerns me, but you’re right. We would always try, and people can actually put a supplementary submission in if they want to, a written submission and see how that goes. It might not always be accepted, but you’ve got that option and sometimes they will allow for that automatically. That will be stated that you can submit on this point and require a new due date, but certainly if something has come in late and it’s controversial or it’s not what we would want, then definitely that’d be one of the topics we would raise in our oral submission.

The problem with the 2020 trust disclosure rules

Now, if I go to the trust disclosures one, which is a pet hate of ours to be honest with you, that had all the hallmarks, TB, of coming in late as a pre-Christmas present, under urgency, without public consultation. And came with the 39% rate also introduced the same way for when that all came through.

And it’s never good to put something like that into primary legislation because it’s very hard to alter and fix in a quick and meaningful way. And it just went way over the top. And what I mean by that, my personal preference would have been that they’d had a census to get the information gaps that they had and fill it in that way first and then have a lot lesser regime in terms of information you want to keep on an ongoing basis.

11% of trusts return 81% of the income

They’ve had a number of years of this now and we use their own data they collected from the first year of the trust disclosure information to go to the select committee when they were putting the trustee rate up to 39%. Because their own data showed in the end that there was only 11% of trusts that earned more than $180,000 in this country as total trustee income. But the dichotomy was that those 11% actually earned 81% of total trust income.

TB
Wow.

John
And when you went through the numbers underneath that, there was a very significant number of trusts that earned very little income, nowhere near $100,000 or $80,000. Some of them were just $1,000 or $2,000 when you think about it. And that very small percentage, and this is how we got to that scenario, having a small trust exemption in terms of the trustee rate at 33%, which we pushed for very hard.

We think the rules as they’ve stood, and they’ve been gradually reduced, are still too harsh on the smaller trusts because even though they’ve got reduced disclosure requirements, they’re still disclosure requirements and still quite onerous to do. We would like now to see those smaller trusts removed completely and just look very closely at the information you need from the larger trusts.

Because we had a whole mismatch there on the way through of information around distributions and deemed distributions and deemed settlements. And some of them it was just going to the family bach for a holiday, it was in a trust scenario, and you had the option of valuing that at market value or nil. Most people would have taken nil. But once you start mixing numbers and characterisations up like that, you get some meaningless data. I’m not sure what you got out of that. And I think they just didn’t know what they wanted and asked for too much.

Impact of the Trusts Act 2019

TB
Yes, that was a problem. That’s picking up an earlier point, that one-size-fits-all. Yes, the trust disclosure rules were very onerous. The new rules did coincide with the Trusts Act 2019 coming into force which requires more disclosure going on then, but my view would be, “What’s the baseline that’s required under the Trusts Act 2019?”  And that ought to be acceptable within certain parameters, unless you define a large trust and say it’s income is X or assets worth Y and work around that rather than the approach we got.

John
The problem though Terry, with the rules that they brought in was that they weren’t quite linked with the trust.

So you were asking for things that weren’t already in existence and people had to then create extra costs to combine things or strip things apart like land and buildings. Now they’ve realised that, they’ve simplified that to allowing you to present it in the way you normally present it.

The problem we see though, is whilst it looks good that this is being repealed from our perspective, when you read the fine print, and it’s always in the detail, it says because they think that they’ve got their general powers to collect the same sort of information and it’s up to the Commissioner now to decide what information they need on a go-forward basis. So, if you saw one of our recent press releases, it was more around a plea to Inland Revenue to be sensible about what they  need be mindful of . And I think there’s a huge dichotomy here between that small trust, big trust scenario when you look at where all the income’s been earned. And the problem’s different now too, because we’ve got a trustee rate of 39% and a top marginal tax rate of 39%. Presumably that’s taken some of the heat out of what the fear was in the first place and why they needed the information.

Tips for a good written submission?

TB
In terms of tips for submitters, what would you say from your experience? Because obviously, you’ve probably got the best guides on how to submit. All submissions pick out key points and use your 10 min that you get wisely. But on a written submission, what would you say would be a good way of approaching it?

John
Look, there’s one key bit of advice I’d give, and you can take this how you like, but I think a lot of submitters are guilty of focusing on the negative. They’ll come out and say “We absolutely hate this thing. You should not do it. What the hell were you thinking?”

But that’s all they say and they don’t offer anything. I think what is really powerful is if you can come along and say “look, we don’t like this for X, Y, and Z reasons. We think there’s a better way of doing it or achieving what you want to achieve. And by the way, this is what it could look like.”  If you can put up alternative scenarios, that’s what we went to the select committee with on that 39% trustee rate.

We came out and said well, we’ve got this data now from you. We had an Official Information Act request. We gave them a two-page summary and when presented on it and we did that in advance. So, I think for submitters the idea is not just to have a rant.  I think for some people it’s cathartic, but it doesn’t achieve anything other than getting it off your chest.

The reality is having your eyes open, be measured and objective. It’s not a personal affront. What you’re trying to do is be seen to be sensible and have objective ideas. Set out what you see wrong with it, that’s fine, but then offer up an alternative, that’s the most powerful thing you could do. And you may not have an alternative necessarily, but you don’t have to have all the technical detail to say how this will work, because that’s their job to put together at the end of the day. If you can help them, that’s fine.  If you’ve just got a genesis of an idea which says, well, could it be done another way, which would involve this and this? That’s all you have to do. You don’t have to give them the answer. All you have to do is point out that it’s in need of a solution and that’s possibly what it could look like.

TB
Well, I think on that note, that seems a good place to leave it. My guest this week has been John Cuthbertson, FCA of the Tax Leader of Chartered Accountants, Australia and New Zealand. John, it’s been fantastic to have you on talking about your role, The Generic Tax Policy Process and submissions. And thank you for your insights on the new tax bill. Really great pleasure to finally have you as a guest. Thank you so much.

John
Well, thank you for having me, TB. It’s been a been a pleasure.

TB
That’s all for this week, I’m TB Baucher and you can find this podcast on my website www.baucher.tax or wherever you get your podcasts. Thank you for listening and please send me your feedback and tell your friends and clients. Until next time, kia pai to rā. Have a great day.

The current state of the Generic Tax Policy Process and when does consultation become lobbying.

The current state of the Generic Tax Policy Process and when does consultation become lobbying.

21 Aug, 2023 | The Week in Tax

  • Changing the rules around disposing of trading stock
  • How do we pay for managed retreat?
  • Tik-Tok and GST fraud

At last week’s International Fiscal Association’s Trans-Tasman conference, a lot of the discussion among New Zealand advisors outside of the seminar rooms was around the state of tax policy. There is a growing concern that a more active government with interventions and proposals such as the proposed zero rating of GST on fruit and frozen and fresh fruit and vegetables is undermining the Generic Tax Policy Process which has been in place for nearly 30 years.

Like many practitioners, I’ve been involved with the GTPP at various stages. It is well-regarded internationally and has operated since 1994. It is intended to ensure

“better, more effective tax policy development through early consideration of key policy elements and trade-offs of proposals, such as their revenue impact, compliance and administrative costs, and economic and social objectives. Another feature of the process is that it builds external consultation and feedback into the policy development process, providing opportunities for public comment at several stages.”

However, the concern is emerging that against this well-established background more recent measures such as the Tax Principles Bill, or the legislation that enabled Inland Revenue to carry out its high wealth individual research project, have happened outside the GTPP framework. The proposed GST zero rating of fresh and frozen fruit and vegetables could be another example. These developments are unsettling the previously predictable process for working through and discussing tax proposals.

I’m of the view that tax is fundamentally about politics and politicians will always make political calls. The GTPP is intended to minimise the effect of that and give more predictable tax policy outcomes. But you can’t eliminate it entirely and this dichotomy between efficient tax policy process and politics will always be there.

There is also the question raised in an interesting story this week by BusinessDesk (paywalled) in reference to the work of the Corporate Taxpayers Group (CTG) about when consultation ends and lobbying begins. The CTG includes the main corporate taxpayers such as Fonterra and the four big banks. The New Zealand Superannuation Fund, the largest single taxpayer in the country, is also a member.

The CTG meets regularly at the offices of Deloitte (more frequently than I had imagined) as the story outlines, and there is an annual membership fee which is to pay for the secretariat, which will make submissions to Parliament and to Inland Revenue.

But when does this move from consultation to lobbying. Very difficult to say. I don’t see it as lobbying although I do appreciate the risks that might be involved in that. But having been involved in the process and been in meetings with CTG representatives, Inland Revenue officials, I don’t believe that’s the case.

But as I said, I can understand why some might be concerned by this. It comes back to a key part of any democracy, and that’s transparency. But on the whole, as I said, I think New Zealand’s been very well-served by the GTPP. And I know that internationally it’s very well regarded because it has got a stability of process to it.

I think one of the issues that’s causing raising concern is because left wing governments are likely to more interventionist. But I do think this situation is exacerbated at the moment because the strain of the boundary between capital and revenue, and our general under taxation of capital, the lack of a capital gains tax, wealth, tax, death duties, are putting strains on the system. And so, politicians are trying to find shortcuts to try and deal with this issue and the need for more revenue. You can dispute how much is needed. But when I look at the state of roads and hospitals and you see the growing bill for climate change, my view is and it’s also the view of Treasury, as I pointed out a number of times, and its Long Term Insights Briefing He Tirohanga Mokopuna we need more revenue.

A whole lot of hissing

So, there are strains emerging and it’s impacting the GTPP, which makes tax advisers understandably a little unsettled about how well that process will continue.  As Louis XIV’s finance minister Jean-Baptiste Colbert said in probably one of the most famous maxims about taxation: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” That was true in the 17th Century and remains true today. And there is quite a lot of hissing going on at the moment.

The GTPP in operation – consulting on trading stock

Moving on and still on to the topic of consultation and an example of the GDP in operation. Inland Revenue has released a paper for consultation on the treatment of trading stock disposed of below market value.

At present, whenever trading stock is given away, or disposed of for below market value it’s deemed to have been disposed of at market value. The reason for that rule is reasonably solid. It’s to counter potential tax avoidance where the stock is given away or may be used for private consumption by a business owner or sold at a deep discount to associated persons. In some cases, it could apply for a particular industry, exchanges of stock could take place at cost or less. All of those generate benefits in terms of the under taxation of revenue. So that’s why that rule exists.

But there have been instances where businesses have wanted to give away stock and make donations for charitable purposes, and that’s when this rule becomes problematic because they can’t effectively do so. Over time the practice has developed for granting temporary emergency relief in some situations as a work-around.

In 2004 a permanent override was put in place with donations to farming, agricultural and fishing businesses during what is termed an adverse event. And there have been a large number of those weather-related adverse events either for drought or like we’ve experienced this year, flooding.

Between 2010 and 2012, there was a temporary override for 18 months in response to the Canterbury earthquakes. And then again, starting in March 2020, a temporary override was put in place for four years in response to COVID 19.

That override will end on 31st March next year, and the object of this consultation paper, is to propose a more permanent solution rather than using ad hoc solutions whenever we encounter a particular scenario such as COVID or earthquakes.

The consultation paper runs to 29 pages and includes a useful appendix which summarises all the potential summary policy options and how they may play out. Overall, this is a good example of the Generic Tax Policy Process in operation. Consultation on the paper is now open and closes on 6th September.

Managing retreat & how to pay for it.

As just mentioned, temporary emergency relief from the usual stock donation rules has been granted for a number of reasons, including this year, the flooding in January and February and the impact of Cyclone Gabrielle. A constant theme of this podcast is the question of environmental taxation and the need to address the longer-term question of how we going to pay for these climate related events.

Earlier this week a Government expert working group released its report on the question of what’s termed managed retreat.

The report, which clocks in at 284 pages, is very comprehensive and raises a number of potential scenarios and alternative measures that could be needed. One of which, as the excellent Newsroom story covering the report notes, is conditional powers to basically force people to leave particular areas that are under threat.

Being a tax podcast the question we are most concerned about with environmental and climate change impacts is how we are going to pay for it. The report has two key proposals E65 and E66.

But consider this, we have currently 700 homes which have been rendered uninhabitable following the flooding in January and February. And there’s another 10,000 homes that require flood protection. The Government has said it will split the costs over the uninhabitable homes with local councils affected. But, as far as I can tell, neither the councils nor the Government have really fully funded for these costs of maybe a cool billion or so this year and maybe every year and rising. So, it is an issue that needs to be addressed.

The report has some interesting discussion around what happened in Canterbury in relation to the earthquakes and then the first and I emphasise, first, example of managed retreat, from the Bay of Plenty settlement of Matatā

The report says, however we decide to fund this, the funding should not be subject to the usual vicissitudes of the annual budget round because that would mean it would lead deferment and dangerous delay. When it comes to kicking a football down the road, the politicians, as we know, are better than the Football Ferns at kicking it a long way out of trouble. Or so they think, but the issue still remains. I totally agree, therefore, with the report’s recommendation that there has to be a permanent funding solution.

I maintain that if we are going to do something around the lines of environmental taxation, the funds that are allocated to it should be hypothecated, and certainly not form part of the consolidated fund because we’ll then have politicians tempted to raid those funds. We’ve seen this in the recent Auckland Budget Council, by the way, where reserves built up for environmental purposes were used for other purposes.

In terms of holding politicians to account, I think we need to be asking a lot more questions about them on this matter because this is going to affect us all. We’ve had a miserable winter with extensive flooding and the ground is sodden. What happens when the next big floods come along, who pays for the clean-up?

No longer friends with Russia…

At the International Fiscal Association Trans-Tasman conference last week, we spent a lot of time discussing double tax agreements. It so happens, Russia has decided to suspend its double tax agreements with 38 countries, which it considers are now ‘unfriendly’ in the wake of the invasion of Ukraine. New Zealand is on that list. So that probably means that for someone in Russia trying to claim tax relief from under the double taxation between New Zealand and Russia, they’re out of luck and they’re probably going to be facing higher tax bills as a consequence.

TikTok and GST fraud

And finally, just on the topic du jour this week of GST, there’s an absolutely extraordinary story coming out of Australia about how social media influencers on TikTok encouraged at least 56,000 people to take part in a A$1.6 billion tax fraud scheme. Apparently these TikTok influencers explained how to get fraudulent GST refunds. The scam involved obtaining an Australian Business Number, then filing Business Activity Statements (the equivalent of GST returns) and claiming false GST refunds. In some cases, there were attempts to claim refunds of up to A$100,000.

The Australian Tax Office apparently is still grappling with the sheer size of the scandal. There’s a story in the Australian Financial Review about a Victorian woman who managed to stay out of jail, after repeated attempts to try and get A$115,000 fake GST refunds for a dog grooming business that had been set up more than a decade ago but had been largely dormant until 2020 before she attempted to pull this scam.

Fascinating story which will be interesting to see how it plays out. To me it lends support to the suggestion that we should look seriously at zero rating transactions between GST registered businesses. It should be a means of stopping such attempted frauds. Obviously, if that proposal is taken forward, it should go through the proper Generic Tax Policy Process consultation.

Well, that’s all for this week. I’m Terry Baucher and you can find this podcast on my website www.baucher.tax or wherever you get your podcasts. Thank you for listening and please send me your feedback and tell your friends and clients. Until next time, kia pai to rā. Have a great day.