FENZ package prompts industry anger
05 Jun 2017
Under the FENZ Act, in addition to being given the onerous task of collecting the levy, insurers and brokers will be liable for shortfall penalties.
These new duties and penalties have angered insurance industry professionals interviewed by Insurance Business, who unanimously feel the tax is unfair, inefficient and misguided and that Internal Affairs Minister Peter Dunne “misses the point,” – something he had previously said about critics.
Auckland barrister Veronica Cress commented that this type of political rhetoric is unhelpful when the FENZ Act raises so many serious legal and economic issues. She added that from a legal point of view the liabilities and penalties that insurers and intermediaries will be exposed to during the levy-collection process are particularly concerning.
“Shortfall penalties of between 20% and 100% can be imposed if you get it wrong. The starting point under the act is that insurers and intermediaries are jointly and severally liable with policyholders to pay these,” she elaborated.
“This is clearly unjust when the policyholder is the taxpayer with the underlying obligation to pay the levy.”
She further pointed out that in addition, the “levy avoidance” provisions in the act are based on general income tax definitions that are notoriously broad and difficult to apply without assistance from the courts.
“These anti-avoidance provisions are unlikely to achieve the ‘certainty’ that the act states is one of its purposes,” she noted. “The whole levy regime in part three of the act needs to be looked at further. It is a minefield of legal and economic issues and bound to blow up before the next general election on September 23, 2017.”
- Insurance Business