Academics at AUT Law School have applauded the Prime Ministers announcement this week to support a $1 billion upgrade of the IRD computer system.

In what they regard as a, "step forward in a Single Economic Union", Professor Chris Ohms and Dr Karin Olesen say the upgrade is crucial.

"At the heart of tax compliance is the 'tax compliance model', which is used by both the New Zealand IRD and the Australian ATO," say Ohms and Olesen.

"This model is seriously flawed and needs reworking to better reflect taxpayer behaviour within Australasia."

Ohms and Olesen are currently engaged in a major Trans-Tasman research project on tax compliance. The research findings are expected to form the basis of a compliance strategy common to both New Zealand and Australia.

"The concept mooted by Don McKinnon of an ANZAC single tax system is one we fully support - a single tax number and a single tax system for New Zealand and Australia. This would mean a common data base, and the computer upgrade mooted by the Prime Minister could be jointly funded by Australia.

"It makes sense given the move to a single ANZAC border and is already supported in our Double Tax Agreement with Australia by articles supporting the exchange of information and mutual assistance in the collection of taxes."