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Reporting entity

Inland Revenue is a government department as defined by section 2 of the Public Finance Act 1989 and is domiciled and operates in New Zealand.

The relevant legislation governing Inland Revenue’s operations is the Public Finance Act 1989.

Inland Revenue is a wholly owned entity of the Crown whose primary objective is to provide services to the public rather than to make a financial return. Accordingly, Inland Revenue has designated itself as a Public Benefit Entity (PBE) for financial reporting purposes.

These non-departmental financial schedules present financial information on funds managed by Inland Revenue on behalf of the Crown.

These non-departmental balances are consolidated into the ‘Financial Statements of the Government of New Zealand for the year ended 30 June 2021’. For a full understanding of the Crown’s financial position and the results of its operations and cash flows for the year, refer to the consolidated ‘Financial Statements of the Government of New Zealand for the year ended 30 June 2021’.

Reporting period

The reporting period for these financial schedules is for the year ended 30 June 2021. The forecast financial schedules are for the year ending 30 June 2022.

The Chief Executive and Commissioner of Inland Revenue authorised these financial schedules on 29 September 2021.

Statement of compliance

The financial schedules have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and the Treasury instructions.

Inland Revenue has applied the Tier 1 Public Benefit Entity International Public Sector Accounting Standards (PBE IPSAS) in preparing the 30 June 2021 financial schedules.

Basis of preparation

The financial schedules have been prepared on a going concern basis, and the accounting policies set out below and in the notes to the financial schedules, have been applied consistently to all periods presented in these financial schedules.

These financial schedules have been prepared on a historical cost basis, unless otherwise stated. The accrual basis of accounting has been used.

Functional and presentation currency

These financial schedules are presented in New Zealand dollars, and all values are rounded to the nearest thousand dollars ($000). The functional currency of Inland Revenue is New Zealand dollars.

Accounting standard issued and not yet effective

The standard issued but not yet effective, that has not been adopted early is:

PBE IPSAS 41 Financial Instruments

The External Reporting Board issued PBE IPSAS 41 Financial Instruments in March 2019. This standard supersedes PBE IFRS 9 Financial Instruments, which was issued as an interim standard. It is effective for reporting periods beginning on or after 1 January 2022. Inland Revenue does not intend to adopt PBE IPSAS 41 early. When this standard is adopted, Inland Revenue does not expect any significant changes as the requirements are similar to PBE IFRS 9.

Estimations and judgements

In preparing these financial schedules, judgements, estimates and assumptions have been made concerning the future.

These judgements, estimates and their associated assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on experience, including expectations of future events that are believed to be reasonable under the circumstances, and other factors. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods if the revision affects both current and future periods.

The estimates and assumptions that have a significant risk of causing a material adjustment to revenue, and the carrying amounts of receivables and payables within the next financial year, are referred to in the notes. The impact of COVID-19 on estimates and assumptions is also discussed in these notes.

Accounting policies

Significant accounting policies are included in the notes to which they relate. Significant accounting policies that do not relate to a specific note, and which materially affect the measurement of financial results and the financial position, are outlined below.


Expenses are recognised in the period to which they relate.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash in transit and funds held in bank accounts administered by Inland Revenue. All cash held in bank accounts is held in on demand accounts and no interest is payable to Inland Revenue.


When the presentation or classification of items in the financial schedules are amended or accounting policies are changed, comparative figures are restated to ensure consistency with the current period, unless it is impractical to do so.

Change in accounting policies

There has been one change in accounting policy since the date of the last audited financial schedules.

From this year, unpaid child support assessments related to the Crown entitlements are recognised on the Schedule of non-departmental assets at fair value in accordance with PBE IPSAS 23 Revenue from Non-Exchange Transactions. Previously these were not recognised. This change has resulted in an increase in child support receivables of $155 million. Refer to note 5 for more information.

Other than this change, the accounting policies have been applied consistently throughout the year.

Budget and forecast figures

The budget, revised budget and forecast figures have been prepared in accordance with NZ GAAP using accounting policies that are consistent with those adopted in preparing these financial schedules.

The budget and forecast financial schedules are not subject to audit.

The budget figures for 2020-21 are those included in ‘The Estimates of Appropriations for the Government of New Zealand’ for the year ending 30 June 2021. After the Estimates went to print, the tax forecasts were updated to take account of late-breaking Government decisions, particularly in relation to COVID-19 pandemic relief measures.

The revised budget figures for 2020-21 (refer to the ‘Statement of non-departmental budgeted and actual expenditure incurred against appropriations’) are those included in ‘The Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2021’.

Statement of non-departmental budgeted and actual expenditure incurred against appropriations

The forecast figures for 2021-22 are those included in ‘The Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2022’.

The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2022 -

The forecast financial schedules have been prepared in accordance with the requirements of the Public Finance Act 1989 to communicate forecast financial information for accountability purposes. They are compliant with PBE Financial Reporting Standard 42 Prospective Financial Statements.

Forecast policies

The forecasts have been compiled on the basis of existing government policies and ministerial expectations at the time the schedules were finalised and reflect all Government decisions up to 12 April 2021.

While Inland Revenue regularly updates forecasts, updated forecast schedules for the year ending 30 June 2022 will not be published.

The main assumptions are:

  • Estimates for COVID-19 economic impacts and the Government’s COVID-19 economic response packages, including:
    • the reinstatement of a 2% diminishing value depreciation rate for commercial and industrial buildings.
    • increasing the low-value asset write-off threshold to $5,000 for the 2021 income tax year.
  • Tax revenue: tax policy changes enacted and announced by the Government will take place as planned and will affect tax revenue and receipts as calculated and agreed between Inland Revenue and the Treasury.
  • Student loans: the fair value of student loans is based on a valuation model adapted to reflect current student loans policy. As such, the fair value over the forecast period is sensitive to changes in a number of underlying assumptions, including future income levels, repayment behaviour and macroeconomic factors such as wages inflation and discount rates. Any change in these assumptions would affect the present fiscal forecast.
  • Estimated year-end information for 2020-21 is used as the opening position for the 2021-22 forecasts.

For other key fiscal forecast assumptions, refer to the ‘Budget Economic and Fiscal Update 2021’ on Treasury’s website.

Budget Economic and Fiscal Update 2021 -

The link above leads to information not covered by the audit opinion.

Independent auditor's report

Any changes to budgets during 2021-22 will be incorporated into the ‘Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2022’.

Variations to forecast

The actual financial results for the forecast period covered are likely to vary from the information presented in these forecasts. Factors that may lead to a material difference between information in these forecast financial schedules and the actual reported results include:

  • changes due to initiatives or legislation approved by Cabinet
  • macroeconomic changes, including the expected impacts of COVID-19, impacting revenue, expenditure and debt levels
  • the timing of customers’ filing of returns and related payments
  • the timing of customer refund and credit claims
  • the outcome of disputes, including litigations.
Last updated: 03 Nov 2021
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