New Zealand's tax laws are so complicated and poorly understood that a new review has recommended the people who write them should undertake "regular" training in "plain English," - and possibly include more visual aids with future tax laws.
Two years ago, IRD commissioned a report from lawyer Graeme Smaill into the "approach adopted to taxation law drafting".
That report landed in June, but IRD refused to release it in full. IRD requested a digested summary for release. This was turned in last month and is now available online.
The report is damning in parts, warning that almost nobody - not even tax specialists - could understand New Zealand's tax laws.
"Even tax specialists say they simply cannot understand some of the legislation," the review complained.
"There is a need for more user-friendly drafting, concentrating on the major issues/concepts that the average reader who needs to use the legislation can follow," the review said.
The review is significant as IRD is the only government department that writes its own laws - other legislation is written up by the Parliamentary Counsel Office.
Problems with tax law fell into a few key camps.
The review found drafting of tax laws was often rushed because so much time was spent thinking about what policy to implement that not enough time was spent actually drafting up how it would work.
The drafting was often siloed - different drafters had their own techniques and don't swap notes.
One area the review recommended looking at more closely was the use of "visual aids", with the review saying law drafters should be "encouraged to creatively use visual aids to communication [SIC]".
The review recommended the need for further "peer review" to assess the "readability".
The review said that a mysterious IRD staffer, known only as "Sharon" does a plain English sense review of IRD of some tax legislation before it is published, however IRD is considering outsourcing this job to an artificial intelligence program in the future, thinking robots speak more plainly than tax law drafters.
The Herald asked IRD who "Sharon" was and was told she was the "editor in [the]legislative drafting unit".
When asked for Sharon's surname, an IRD spokeswoman said IRD would prefer the Herald refer to her only as "the editor in IR's legislative drafting unit".
The report raised concerns that too much time was spent developing tax policy, while not enough time was spent drafting the actual legislation.
"Ninety per cent of the time seems to be spent on policy development with only a rushed 10 per cent on the actual legislation".
"[D]rafting is often left to the end of the process, with drafters working under real time pressure; and late developments always create significant problems and time pressures lead to imperfect legislation".
Another issue was that tax legislation appeared to want to explore almost every scenario to which taxes might apply, meaning long, overly detailed laws.
"The legislation becomes overly complex and hard to understand if it aims to cover all possible fact scenarios, rather than focusing on the major likely fact scenarios.
Looking at each scenario did not actually mean that the drafters writing the laws were making them any easier to be understood: "some drafters try to simplify and aid readers and some do not try," the review said.
"There is a need for more user-friendly drafting, concentrating on the major issues/concepts that the average reader who needs to use the legislation can follow".
Deloitte tax partner Robyn Walker said she "totally" agreed tax legislation was overly complicated.
"Hybrid rules - anything to do with international tax, BEPS [Base Erosion and Profit Shifting] rules, they are very complicated," Walker said, adding that rules around land were also complicated.
She disagreed that rules around things like fringe benefit tax (FBT) were overly complicated.
"I think the drafting of the FBT is quite fine. FBT is easy to understand" Walker said.
"People's problem with FBT is they don't like the answers," she said.
Walker said tax legislation should be clearer about principles.
"Ideally you should have a principle," she said. The principles would guide people's interpretation of the law.
"When you are doing that, that's when things are getting super complicated. If people have a general guide about this is what we are trying to achieve and if you stray from that then you need to be concerned about avoidance," Walker said.
Other recommendations were more esoteric. The report had feedback on the use of colons to mean "or", finding that too often colons had been substituted for the word "or" and that this was not "user friendly".
"There is continual confusion with the use of colons meaning 'or' and that approach does not seem to involve 'plain language'."
However, colons was so controversial the report did not come to any final conclusion on whether colon use should be restricted.
Instead, the reviewer recommended a further dedicated review be done into the use of colons.
The report said a review should be "undertaken of all usages in the Income Tax Act of list ending in colons, to identify and correct anywhere there is insufficient communication by the opening words of the operation of the list".
It then recommended a colon consultation between members of IRD's drafting unit and PCO on their colon guidelines.
Revenue Minister David Parker was unavailable to comment on the likelihood of a colon review or other matters raised in the report.