IN-CON FIDENCE
16 February 2022
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s 9(2)(a) OIA
Team Lead
Crown
Significant Enterprises
Inland Revenue
By email: s 9(2)(a) OIA
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Tēnā koe s 9(2)(a)
Orange Tamariki Ministerial Advisory Board tax treatment of Board Member
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Fees I am writing to you to provide an update on the tax treatment of board member fees
for the Oranga Tamariki Ministerial Advisory Board (the Board) and to confirm the
steps we have taken to address the historical incorrect treatment of tax.
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I understand officials from Oranga Tamariki contacted you in October 2021 to
discuss concerns over GST being invoiced on board members fees. Subsequently
PwC also contacted you in November regarding the treatment of tax for the Board
members on behalf of Oranga Tamariki. As you may recall there were several points
covered around both the charging of GST and the deduction of withholding tax from
the members.
I am advised that PwC met with you on 2 November 2021 where they sought specific
advice regarding how to rectify historical payments to the board members and the
return of withholding tax to Inland Revenue. It was confirmed that withholding tax
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would be deducted from future payments to the Board Members.
You agreed that the Board Members needed to provide Oranga Tamariki assurance
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that they will return the income in their respective 2021 and 2022 income tax returns.
You also noted Oranga Tamariki needed to:
•
Communicate with each Board Member clearly setting out what is required to
rectify the incorrect tax treatment, both from a historical and prospective basis,
•
Provide confirmation to each Board Member that withholding tax will be
deducted from future payments,
•
Seek assurance from each Board Member that they will/have returned the
income in their 2021 and 2022 income tax returns, and
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•
Provide you with detailed information on what has been paid to each Board
Member to date, where withholding tax was not deducted, for you to complete
spot checks of their 2021 and 2022 income tax returns.
I can confirm that we wrote to all Board Members in early December 2021 setting out
that all payments to members are subject to withholding tax and the deduction of
withholding tax will be applicable from 1 September 2021 onwards. The payment of
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Board Member fees was temporarily paused while we understood and corrected the
treatment of tax on members fees.
In the letters to the Board Members, we clearly set out each step required to rectify
the historical treatment of payments and requested they provide us assurance they
would return the income direct to Inland Revenue for the applicable tax periods.
Please find attached a copy of the letters sent to the Board Members. I have also
attached a copy of the Board Member’s assurance (email) of their intention to pay
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the appropriate amounts directly to Inland Revenue.
To enable you to carry out assurance on the 2021 and 2022 income tax returns for
the Board Members you requested copies of the payments made to the end of
August 2021. I have attached a table of the payments made to each Board Member
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for the period 1 February to 31 August 2021.
I can confirm there were additional payments made to the Chair of the Board during
this period however these were subsequently identified as an overpayment. The
Chair is returning those payments to us; therefore, these are not included in the
attached schedule.
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Thank you for your ongoing patience and support in addressing and the tax
treatment of members fees. The approach you have taken to support us in
addressing these issues is appreciated. I am pleased to advise that the necessary
steps have since been taken to improve and strengthen the controls to prevent this
from occurring in the future.
I trust that the information provided above and the assurance we have now provided
resolves the incorrect tax treatment. If you have any questions or would like further
information, please contact me s 9(2)(a) OIA
or Julie Miller, Acting Director
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Review Management, s 9(2)(a) OIA
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Nāku noa, nā
Jane Fletcher
Acting Deputy Chief Executive
Governance and Engagement
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Official
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