You are here:
NZLII >>
Databases >>
New Zealand Bill of Rights Act Reports >>
2011 >>
[2011] NZBORARp 16
Database Search
| Name Search
| Recent Documents
| Noteup
| LawCite
| Download
| Help
Taxation (Budget Measures) Bill (Consistent) (Section 19(1)) [2011] NZBORARp 16 (5 May 2011)
Last Updated: 29 April 2019
5 May 2011
ATTORNEY-GENERAL
LEGAL ADVICE
CONSISTENCY WITH THE NEW ZEALAND
BILL OF RIGHTS ACT 1990: TAXATION (BUDGET MEASURES) BILL
- We
have considered whether the Taxation (Budget Measures) Bill (IRD 15200/4.0) (the
‘Bill’) is consistent with the New
Zealand Bill of Rights Act 1990
(‘Bill of Rights Act’). We understand that the Bill is to be
considered by the Cabinet
Legislation Committee on Thursday, 12 May 2011.
- The
Bill amends the Income Tax Act 2007 to set the annual rates of income tax for
the 2011-12 tax year and make changes to KiwiSaver
and Working for Families
(WFF). The changes to WFF raise an issue of apparent age discrimination.
Changes to Working for families
- Section
19(1) of the Bill of Rights Act affirms that everyone has the right to freedom
from discrimination on the grounds of discrimination
in the Human Rights Act
1993. The grounds of discrimination under the Human Rights Act include age.
- Drawing
on the New Zealand case law on discrimination, we consider that the key
questions in assessing whether there is a limit on
the right to freedom from
discrimination are:1
- (a) does the
legislation draw a distinction based on one of the prohibited grounds of
discrimination; and if so
- (b) does the
distinction involve disadvantage to one or more classes of individuals?
- In
determining if a distinction arises, consideration is given to whether the
legislation proposes that two comparable groups of people
be treated differently
on one or more of the prohibited grounds of discrimination.2
The distinction analysis takes a purposive and untechnical approach to
avoid artificially ruling out
1 See, for example, Smith v Air New
Zealand [2011] NZCA 20; Atkinson v Minister of Health and others
[2010] NZHRRT 1; McAlister v Air New Zealand [2009] NZSC 78; and
Child Poverty Action Group v Attorney-General [2008] NZHRRT 31.
2 Quilter v Attorney-General [1997] NZCA 207; [1998] 1 NZLR
523 (CA) at [573] per Tipping J (dissenting) relied on in Atkinson v Minister
of Health and others [2010] NZHRRT 1 at [199]; McAlister v Air New
Zealand [2009] NZSC 78 at [34] per Elias CJ, Blanchard and Wilson JJ and at
[51] per Tipping J; and Child Poverty Action Group v Attorney-General
[2008] NZHRRT 31 at [137].
discrimination.3 Once a distinction on a prohibited
ground is identified, the question of whether disadvantage arises is a factual
determination.4
- The
Working for Families (WFF) provisions of the Income Tax Act 2007 provide for tax
credits paid in cash for certain families with
children. The amount of the tax
credit depends on the family’s annual income and the number and age of the
children. Once a
family’s income reaches a defined level, each dollar over
this threshold will cause a certain amount to be taken off the tax
credit. The
amount taken off, known as abatement, will continue as income increases until
the tax credit is exhausted. The Bill will
lower the threshold amount and
increase the rate of abatement. The changes to the thresholds and abatement
rates do not draw a distinction
based on one of the prohibited grounds of
discrimination and are not discriminatory.
- The
WFF tax credits are made up of four types of payments: family tax credit, in-
work tax credit, minimum family tax credit and parental
tax credit. Currently,
the family tax credit has a prescribed amount5 that is
higher for children aged 16, 17 and 18 than for younger
children.6 The prescribed amount increases over time
generally in line with inflation. The Bill seeks to suspend any future increases
to the
prescribed amount for 16 to 18 year olds until the younger and older
children’s prescribed amounts are the same. The increases
will then
continue for all children.
- The
Bill distinguishes between two groups of children who form part of the
entitlement to Family Tax Credit for their parent(s) based
on the child’s
age. For the purposes of this advice, we note that s 21(1)(i) of the Human
Rights Act 1993 defines “age”
as any age commencing with the age of
16 years.
- The
purpose of the distinction is to eventually align the entitlement between the
two age groups.7 The Inland Revenue Department advises
that there is no obvious rationale for the older group to receive a greater
entitlement. Aligning
the younger8 and older prescribed
amounts would simplify the administration and reduce the fiscal costs of WFF.
The alignment would take place
gradually over time and it is not forecast to be
complete until 2018. It will also be done in such a manner that there is no
nominal
reduction of family tax credit amounts as the amount for those aged 16
years or older is simply not increased for inflation. Under
the Bill, once the
entitlement is equalised, the distinction will end.
- We
consider that freezing the entitlement of the older group until the younger
group catches up is not a disadvantage as it is an
equalisation measure.
3 Atkinson v Minister of Health and
others [2010] NZHRRT 1 at [211]- [212]; McAlister v Air New Zealand
[2009] NZSC 78 at [51] per Tipping J; and Child Poverty Action Group v
Attorney-General [2008] NZHRRT 31 at [137].
4 See for example Child Poverty Action Group v
Attorney-General [2008] NZHRRT 31 at [179]; and
McAlister v Air New Zealand [2009] NZSC 78 at [40] per Elias CJ,
Blanchard and Wilson JJ.
5 Income Tax Act 2007 s MD 3(4).
6 Note that this cohort of children must not be
financially independent and those 18 years of age must be attending either
secondary
school or tertiary education.
7 Note that there are three amounts of Family Tax
Credit for the second or subsequent child: under 13 years, 13-15 years and 16-18
years.
8 For second or subsequent children this means
aligning the 16-18 years amount with the 13-15 years amount.
- Assuming
only for the purposes of this advice that 16 to 18 year-olds suffer a
disadvantage, any such apparent discrimination would
be justified. IRD advises
that broadly there is no policy justification for differential rates based on
the current age bands. Alignment
would provide improvements in administration
and compliance. The changes will also preserve more tax revenue that may be
expended
on more pressing matters. The distinction will only be temporary until
the prescribed amounts are equalised.
- We
consider that the distinction is justified, the means adopted to achieve it are
proportionate, and the practical benefits to society
of the distinction
outweighs the harm done to the individual right or
freedom.9
- This
advice has been prepared by the Public Law Group and the Office of Legal
Counsel. We have concluded that the Bill appears to
be consistent with the
rights and freedoms affirmed in the Bill of Rights Act.
Jeff Orr
Chief Legal Counsel Office of Legal Counsel
In addition to the general disclaimer for all
documents on this website, please note the following: This advice was prepared
to assist
the Attorney-General to determine whether a report should be made to
Parliament under s 7 of the New Zealand Bill of Rights Act 1990
in relation to
the Taxation (Budget Measures) Bill. It should not be used or acted upon for any
other purpose. The advice does no
more than assess whether the Bill complies
with the minimum guarantees contained in the New Zealand Bill of Rights Act. The
release
of this advice should not be taken to indicate that the Attorney-General
agrees with all aspects of it, nor does its release constitute
a general waiver
of legal professional privilege in respect of this or any other matter. Whilst
care has been taken to ensure that
this document is an accurate reproduction of
the advice provided to the Attorney-General, neither the Ministry of Justice nor
the
Crown Law Office accepts any liability for any errors or omissions.
9 Hansen v R [2007] NZSC 7 [123] per Tipping
J.
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/other/NZBORARp/2011/16.html