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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.

Reporting period

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

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

Statement of compliance

The financial statements 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 statements.

Basis of preparation

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

These financial statements 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 statements 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 standards issued and not yet effective

Standards and amendments, issued but not yet effective, that have not been adopted early follow.

PBE IPSAS 2 Statement of Cash Flows

The amendments to PBE IPSAS 2 require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The amendment is effective for annual periods ending on or after 30 June 2022, with early application permitted. Inland Revenue does not intend to adopt the amendments early.

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 ending on or before 30 June 2023. 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.

PBE FRS 48 Service Performance Reporting

PBE FRS 48 replaces the service performance reporting requirements of PBE IPSAS 1 Presentation of Financial Statements and is effective for reporting periods ending on or after 30 June 2023. Inland Revenue has not yet determined how the application of PBE FRS 48 will affect its statement of performance and does not intend to adopt PBE FRS 48 early.

Estimations and judgements

In preparing these financial statements, 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 main estimations and judgements that are relevant to Inland Revenue’s financial statements are disclosed in note 9 (Property, plant and equipment), note 10 (Intangible assets), note 11 (Debtors and prepayments), note 13 (Employee entitlements) and note 14 (Other liabilities). These notes include disclosures relating to the impacts of COVID-19 in Inland Revenue’s financial statements.

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, the financial position and output statements within the Our performance section, are outlined below.

Goods and services tax

All amounts in the financial statements and appropriation and output statements are exclusive of goods and services tax (GST), except for debtor Crown, net debtors and accounts payable, which are stated on a GST-inclusive basis. Where GST is not recoverable as input tax, it is recognised as part of the related asset or expense.

The net amount of GST owing or due at balance date, being the difference between output GST and input GST, is included in creditors and other payables in the Statement of financial position.

The net GST paid or received, including the GST relating to investing and financing activities, is classified as an operating cash flow in the Statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Income tax

Government departments are exempt from income tax as public authorities. No charge for income tax has been provided for.

Cash and cash equivalents

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

Inland Revenue is only permitted to spend its cash and cash equivalents within the scope and limits of its appropriations.

Foreign currency transactions

Inland Revenue’s activities expose it to the risks of changes in foreign exchange rates. Foreign currency transactions (including those for which forward exchange contracts are held) are translated into New Zealand dollars using the spot exchange rates at the dates of the transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the financial results.

Cost allocations

Inland Revenue allocates costs directly to an output where a line of sight exists between an appropriation and business services or projects.

Inland Revenue utilises indirect allocation where business services cannot be attributed directly to an output. Indirect allocation rates are apportioned to outputs based on weighting of relevant direct drivers the business services support.


When the presentation or classification of items in the financial statements 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.

The presentation of some information has changed from the previous period, with prior period balances re-classified to be comparable with current year figures.

Changes in accounting policies

There have been no changes in accounting policies since 30 June 2020.

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 statements.

The budget and forecast figures 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.

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

Statement of budgeted and actual expenses and capital 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 forecast financial statements 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 statements were finalised and reflect all government decisions up to 12 April 2021. While Inland Revenue regularly updates its forecasts, updated forecast financial statements for the year ending 30 June 2022 will not be published.

The main assumptions are as follows.

  • Inland Revenue’s main activities will remain substantially the same as for the previous year.
  • Inland Revenue’s transformation programme will end in 2021-22.
  • Operating costs are based on historical information and Inland Revenue’s best estimates of future costs to be incurred for the delivery its services and the transformation programme.
  • Estimated year-end information for 2020-21 is used as the opening position for the 2021-22 forecasts.

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 statements and the actual reported results include:

  • changes due to initiatives approved by Cabinet
  • technical adjustments to the budget including transfers between financial years
  • the timing of expenditure relating to significant programmes and projects.
Last updated: 02 Nov 2021
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