TAX PRINCIPLES AND THE SERIOUS HARDSHIP PROVISIONS IN AOTEAROA NEW ZEALAND

This article analyses the serious hardship provisions in the Tax Administration Act 1994 (NZ). The article reviews several cases where serious hardship has been claimed by taxpayers. The principles of administrative efficiency, equity and minimisation of tax distortions are used to frame the discussion. These principles are selected for analytical purposes as they were recently proposed by the Aotearoa New Zealand Revenue and Associate Finance Minister to underpin a proposed Tax Principles Act. In determining that the serious hardship provisions meet none of the proposed principles, the article questions what impact a proposed Tax Principles Act will have on existing legislation that does not align with the proposed new Act. It concludes that while there is likely to be little disagreement that tax principles are an important component of tax design, they may be of little benefit if not used to resolve potentially contentious components of existing legislation.