IoD statement on Tax Working Group’s final report
Following the release of the final report by the Tax Working Group, the Institute of Directors (IoD) reiterates its concern around the group’s recommendation to make directors personally liable for PAYE and GST debts of companies. In a submission on the review of New Zealand’s tax system, the IoD stated that the prospect of director personal liability for company taxes is deeply troubling and may have far-reaching and unintended consequences. Withholding funds from the IRD is unlawful and the IRD already has wide powers to take action.
“While the Tax Working Group has altered its recommendation to capture directors who have an economic ownership in the company, this is still too broad for the problem it says needs fixing,” says IoD CEO Kirsten (KP) Patterson.
“The IoD is committed to driving excellence in governance, which includes supporting standards and regulatory frameworks to ensure directors meet their duties and obligations.
“It is critical that boards attract experienced and skilled directors to help raise the standard of governance in New Zealand. Our key concern with the recommendation to introduce this new form of personal liability is that it may deter appropriately qualified people from serving on boards.
“Other concerns include the likelihood of higher compliance and insurance costs, and boards becoming weighed down by conformance rather than focusing on their core strategic role of driving business forward. If the Government doesn’t get this right, there may be unintended consequences that far outweigh any potential benefits from the changes to directors’ personal liability.”