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MSD/IR Working for Families Tax Credits Administration Programme
• Annual report
• Technical information
• System description
• Historical activity
Annual report
Purpose: To inform IR of beneficiaries who have commenced paid employment, so that IR can deliver Working for Families Tax Credits (WFFTC).
Year commenced: 2005
Features: Data transferred each week by online transfer.
MSD disclosure to IR: MSD selects clients with children in their care who have had a ‘trigger event' relating to the cessation or commencement of employment (i.e. benefit has been granted, resumed, cancelled or suspended).
MSD sends full name, date of birth, income and benefit payment information, and MSD and IRD client numbers for both the primary carer and his or her partner. In addition, MSD provides the primary carer's bank account number, address and contact details. Details of each child's full name and date of birth are also included.
2008/09 activity:
MSD and IR jointly distributed $2,673 million in WFFTCs during 2008/09, with 203,000 people receiving an average $156 weekly payment from IR as at June 2009.
An audit on the operation of this programme found there were effective controls in place and no issues were identified. However, a separate audit of the online transfer system revealed some issues (see commentary).
Commentary: An audit on the online transfer system contained two key findings. Firstly, the Technical Standards Report governing the operation of the programme had not been updated to reflect the online transfer approval issued by the Privacy Commissioner. Secondly, security access to the MSD file was set to read-write instead of the required read-only access, providing an opportunity for fraudulent activity.
However, there was no evidence that any fraudulent activity had occurred and changes to remedy the adverse audit findings have been completed. Given the nature of the information transferred in this programme and the adverse audit findings, a new approval with a shorter review period was granted.
Compliance: Compliant, but technical issues identified - see commentary.
| Information matching provision | Tax Administration Act 1994, s.85G |
| Year authorised | 2004 |
| Programme type | Identifying unclaimed entitlement |
| Unique identifiers | Tax File Number, MSD client number |
| On-line transfers | Yes |
System description
Each week, an automated program at MSD selects clients (with children in their care) who have had a trigger event relating to the cessation or commencement of employment and generates a file of beneficiary information (i.e. benefit has been granted, resumed, cancelled or suspended).
MSD sends the full name, date of birth, income and benefit payment information for both the primary carer and their partner. In addition, MSD provides the primary carer's bank account number, address and contact details. Details of each child's full name and date of birth are also included.
Information is transferred from MSD to IR by online transfer using a secure (encrypted) Business to Business (B2B) channel with Web Services[1].
The MSD client information is compared with IR tax records. IR's matching algorithm uses the MSD client number, IRD number, family name, first name, and date of birth to match the two sets of data. Where a match is successful, IR's FIRST database is updated and IR starts or stops paying Working for Families Tax Credits to particular individuals, or changes the amount of money paid to them. When key information or certain combinations of information do not match, IR investigates further.
Normally, departments are prohibited by s.103 of the Privacy Act from taking action against individuals based upon the results of a match without first serving a notice and giving the individual a chance to show why the action should not be taken. However, the Privacy Act contains an exception that allows IR to immediately suspend a tax credit payment based upon a discrepancy produced by the match[2]. However, if IR decides to suspend the payment it must give notice to the individual either before or immediately after the decision and give the individual an opportunity to challenge the suspension. Notice must also be given before IRD take any other adverse action.
Historical activity
This programme commenced operation on 1 April 2005. As the programme only operated for three months during the 2004/05 reporting year, reporting on the results of the programme was limited to reporting the number of records disclosed from MSD to IR.
Since the 2005/06 year, Inland Revenue has been reporting on the operation of their information matching programmes using the process audit approach[3] developed by this Office. The Inland Revenue Corporate Risk and Assurance division have concluded in each subsequent year that that there were effective controls over the administration of this programme.
[1] Web Services are an emerging set of standardised applications to connect and integrate web-based applications over the internet. Web services are endorsed for use in the NZ E-GIF framework.
[2] Privacy Act 1993, s.103(1B)
[3] The Information Matching Compliance Auditing Information Pack can be accessed from the OPC website at http://www.privacy.org.nz/information-matching-audit-2/