Media Releases

This page details the Media Releases that have been recently issued by ITOC:

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Tourism operators release 2001 written agreements with IRD
Date: 20 August 2008

MEDIA STATEMENT
Wednesday 20 August 2008
For Immediate Release

TOURISM OPERATORS RELEASE 2001 WRITTEN AGREEMENTS WITH IRD

The Inbound Tour Operators Council of New Zealand (ITOC) has released samples of the
formal, written agreements its members signed with the Inland Revenue Department (IRD)
in 2001 making clear that fees charged to overseas wholesalers for arranging tours should
be zero-rated for GST.

The IRD has since changed its mind and has advised the industry that it will not honour the
agreements. It will instead seek back taxes, the amount of which is in dispute, with the IRD
advising Tourism Minister Damien O’Connor that it wants only $1-3 million but the industry
having estimated that as much as $30 million may be at stake.

The IRD also appears to have falsely advised Mr O’Connor that the written agreements do
not exist, while telling media yesterday that they were only “informal in nature” and that
“the Commissioner of Inland Revenue has the discretion to change his position from time to
time”.

ITOC President Brian Henderson said his members were flabbergasted that the IRD appears
to have been providing misleading advice to Ministers while all taxpayers would be alarmed
that the tax department was so blithely saying it reserved the right to change its mind
retrospectively on tax interpretations.

ITOC members were also surprised by reports Mr O’Connor claimed to have been
“ambushed” over the issue, Mr Henderson said.

“We have raised this time and time again with the Minister and the Ministry of Tourism, and
we ensured they knew that the GST issue would be top of the agenda at our conference,”
Mr Henderson said. “We cannot account for why Mr O’Connor did not get himself properly
briefed before attending our conference. We expect more from our Minister.”

In contrast, Mr Henderson said his members were thrilled with Shadow Finance Minister Bill
English’s commitment, announced yesterday, to tackle the issue.

Speaking to the conference, Mr English said that while the IRD had to be independent from
the Government, National was concerned about the growing tendency of the IRD “to change
their mind and claw back taxes”.

“We cannot maintain the integrity of the tax system ... if people cannot rely on written
agreements,” Mr English said.

Mr English indicated he believed the issue should be resolved prior to the election but, if
not, “National would be ready with a listening ear”.

END

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