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Taxation (Budget Measures) Bill (Consistent) (Sections 14, 19(1)) [2024] NZBORARp 39 (17 May 2024)

Last Updated: 31 May 2024

17 May 2024

LEGAL ADVICE

LPA 01 01 24

Hon Paul Goldsmith, Acting Attorney-General

Consistency with the New Zealand Bill of Rights Act 1990: Taxation (Budget Measures) Bill

Purpose

1. We have considered whether the Taxation (Budget Measures) Bill (the Bill) is consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990 (the Bill of Rights Act).
2. We have not yet received a final version of the Bill. This advice has been prepared in relation to the latest version of the Bill (IRD 26202/6.0). We will provide you with further advice if the final version includes amendments that affect the conclusions in this advice.
3. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. In reaching that conclusion, we have considered the consistency of the Bill with section 14 (freedom of expression) and section 19 (freedom from discrimination). Our analysis is set out below.

The Bill

4. The Bill provides for tax measures included in Budget 2024. The measures aim to help reduce the cost-of-living pressures for New Zealanders by providing tax relief and additional support to low and middle-income individuals and families. The Bill:
   1. provides tax relief to individuals by adjusting the personal income tax thresholds and expanding eligibility for the independent earner tax credit (IETC);
   2. provides support to low and middle-income families by increasing the in-work tax credit (IWTC) base rate and the minimum family tax credit (MFTC) threshold;
   100. gives effect to the FamilyBoost tax credit, which will support families with the cost of early childhood education;
   4. makes changes to the calculation of the base interest rate for student loans; and
   5. enables Inland Revenue to address certain administrative errors on applications for the Research and Development Tax Incentive.
5. The Bill gives effect to these changes by amending the Income Tax Act 2007, the Tax Administration Act 1994, and the Student Loan Scheme Act 2011.

Consistency of the Bill with the Bill of Rights Act Section 14 – Freedom of expression

6. Section 14 of the Bill of Rights Act affirms that everyone has the right to freedom of

expression, including the freedom to seek, receive, and impart information and opinions

of any kind and in any form. The right has been interpreted as including the right not to be compelled to say certain things or to provide certain information.1

7. The Bill enables a person who is entitled to a FamilyBoost tax credit for a quarter to apply for a refund of that credit. New s 41C(3) of the Tax Administration Act 1994 (clause 18 of the Bill) requires the applicant to complete an application in the manner specified by the Commissioner and accompanied by the information required by the Commissioner. This provision may be considered to limit section 14 of the Bill of Rights Act.
8. A provision which limits a protected right or freedom may be consistent with the Bill of Rights Act if the limitation is reasonable and justifiable in a free and democratic society under section 5 of that Act. The section 5 inquiry may be approached as follows:
   1. Does the provision serve an objective sufficiently important to justify some limitation of the right or freedom?
   2. If so, then:
      1. Is the limit rationally connected with the objective?
      2. Does the limit impair the right or freedom no more than is reasonably necessary for sufficient achievement of the objective?
      3. Is the limit in due proportion to the importance of the objective?2
9. We consider any limit on the right to be justified. The provision serves the important objective of supporting families with the cost of early childhood education and arises only in respect of people eligible for the refund who opt to apply for it. A requirement to provide the Commissioner with specified information on a quarterly basis is rationally connected with that objective and appears a reasonable and proportionate way of achieving it.

Section 19 – Freedom from discrimination

10. Section 19(1) of the Bill of Rights Act affirms the right to freedom from discrimination on the grounds set out in the Human Rights Act 1993 (the Human Rights Act).
11. Two factors must be met for discrimination to be identified under section 19(1) of the Bill of Rights Act:3
    1. there is a differential treatment or effect as between persons or groups in analogous or comparable situations on the basis of a prohibited ground of discrimination; and
    2. that treatment has a discriminatory impact (i.e., it imposes a material disadvantage on the person or group differentiated against).
12. Differential treatment will arise if the legislation treats two comparable groups of people differently on one or more of the prohibited grounds of discrimination. Whether
    
    1. See, for example, Slaight Communications v Davidson 59 DLR (4th) 416; Wooley v Maynard [1977] USSC 59; 430 US 705 (1977).

2 Hansen v R [2007] NZSC 7, [2007] 3 NZLR 1.

3. Ministry of Health v Atkinson [2012] NZCA 184, [2012] 3 NZLR 456 CA at [55]; Child Poverty Action Group Inc v Attorney-General [2013] NZCA 402, [2013] 3 NZLR 729.

disadvantage arises is a factual determination.4 The prohibited grounds of discrimination include marital status.

13. New subpart MH of the Income Tax Act 2007 provides for the FamilyBoost tax credit to provide financial assistance to caregivers with early childhood education costs. Under new section MH 3(5), if a person entitled to a FamilyBoost tax credit has a partner, that partner is not also entitled to a FamilyBoost tax credit, regardless of whether the childcare costs are incurred by both the person and their partner. However, this does not apply where a person is separated from their partner and does not have a new partner. This may result in partnered people gaining less financial benefit from the policy than separated or single persons. This gives rise to prima facie discrimination on the grounds of marital status.
14. Taxation and social assistance legislation necessarily targets limited government assistance to certain groups of people and may draw distinctions on various prohibited grounds of discrimination. Achieving a fair distribution of financial and social assistance to those most in need is a complex social policy matter, and some latitude is generally given to the legislature to achieve its objectives. Moses J in R (on the application of Hooper) v Secretary of State for Work & Pensioners stated:5

In determining how to target resources to those in need, the legislature is entitled to impose ‘bright line’ rules which are easy to apply and which may not focus with precision on the merits of individual cases... such bright line rules in the context of social and economic policy do not lead to incompatibility [in that case, with the European Convention on Human Rights] even if individual hardship is occasioned...

15. The FamilyBoost tax credit is rationally connected to the important objective of reducing cost-of-living pressures for New Zealanders. We consider it is reasonable to assume that partners gain some financial benefit from being partnered and therefore for the policy to treat couples and separated persons differently.
16. Having regard to the degree of deference that is appropriate when dealing with complex social policy issues, we consider the Bill appears to be consistent with the right to be free from discrimination affirmed in s 19(1) of the Bill of Rights Act.

Conclusion

17. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act.
    

Edrick Child

Acting Chief Legal Counsel Office of Legal Counsel

4. See, for example McAlister v Air New Zealand [2009] NZSC 78, [2010] 1 NZLR 153 at [40] per Elias CJ, Blanchard and Wilson JJ.
5. R (on the application of Hooper) v Secretary of State for Work & Pensions [2002] EWHC 191 at [115] as referred to in Howard v Attorney-General (2008) 8 HRNZ 378 at [76] – [77].