Tax Updates: 28 April 2025

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

Do you have the requisite Authority to Act?

Inland Revenue (IR) has released OS 25/03 – Authority to Act for Tax Agents, Representatives and Nominated Persons: Access to a Client’s Inland Revenue Information.

The operational statement replaces the earlier version, OS 22/03, and prescribes how a tax agent, or a representative can obtain the authority to act from their clients and the process for a person to get another person to act for them in relation to their tax affairs and/or their social policy entitlements and obligations.

The statement walks through who can give an Authority to Act, from an individual, where an authority to act must be obtained from the person to whom the information belongs, to non-individuals, where an authority must be provided by a person or persons with the requisite authority to bind that non-individual. Note in this regard, that with respect to trusts, all trustees should have signed the authority unless one trustee has been authorised by the other trustees to act on their behalf.

The statement also refers to authorities for those children under 16 years of age, and incapacitated persons, with the commentary explaining IR’s approach, should a person who was that incapacitated persons representative die or become incapacitated themselves.

IR sets out in OS 25/03, the information it would expect to see clearly addressed in the authority, including where the agent is in the name of an individual, that the authority should also include the words “and staff or contractors”, as applicable.

And on the topic of individual agency, for those of you who have been in the game as long as I have, and operate via a corporate entity but still hold the agency in your individual name (because that’s what we used to do back then), do note that should something happen to you, the agency authorities you have obtained from all of your clients over the years, do not automatically transfer to the company, so you risk leaving a transition nightmare in your wake for your fellow partners and faithful servants. We went through the process ourselves a few years

back, and even with the partner who had held the agency personally still very much a part of the team, it was certainly a bit of a rollercoaster ride for all involved.

Also, as many of us seem to do nowadays, if you outsource work to a 3^rd-party offshore provider, the authority should authorise the agent to allow access to the client’s information from Inland Revenue to that third party to the extent necessary for the completion of the agreed services. This would include identifying any client information that the third-party may need to access.

IR warns that they may audit authority to act documents on occasion, and where non-compliance is identified, there is a risk of removal of the tax agent from the list of tax agents or the cancellation of the agent’s representative status.

Finally, the statement discusses electronic onboarding, and the processes IR would expect to see followed, including that all the required information is clearly set out in the electronic authority to act and that the authority to act is readily accessible for review when requested by Inland Revenue.

OS 25/03 is a 15-page read and contains an example template for an authority to act, should you be looking for something appropriate to use for your clients.

This article was originally published through the ‘A Week In Review’ newsletter. If you would like to receive Richard’s tax updates every Monday morning, you can subscribe here.