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Te Tari Taake Inland Revenue continues to take the approach that every payment or return missed by a customer is an opportunity for us to act early and resolve it. This aligns with a key tax belief we want New Zealanders to hold—that we’ll help people trying to do the right thing. 

Of the returns that customers filed, 96% were on time. 89% of the payments that customers made were paid on time. However, more customers missed payments this year. At 30 June 2023, 44,000 more customers had tax debt than in June 2022.  

Overdue general tax and Working for Families debt at the end of the year amounted to $5.8 billion, $957 million higher than in June 2022. Overdue student loan debt was 9.3% higher and debt owed on COVID-19 support products grew from $34 million last year to $104 million. 

On the other hand, child support debt fell 8%: There’s more here.

Management of debt and unfiled returns

These total amounts of overdue debt are point-in-time numbers, and most customers quickly resolve what they owe. However, we did see a slight decline in the resolution of new customer debt: 59% was resolved within 6 months compared to 62% in 2021–22. 

We have stayed focused on connecting with customers and stepping in to resolve issues early. 

Instalment arrangements, where customers pay debt over time, are a ‘workhorse’ in our approach to help customers manage their payments. 163,000 arrangements were set up this year, compared to 140,000 in 2021–22. 

Customers can set up an arrangement themselves online, and it’s one way we help people gain more control over their situation.

Customers who set up their own arrangement tended to stick to them more—63% of arrangements set up by customers themselves online were kept to compared to 48% of arrangements set up with our support.

As at 30 June 2023, there were 77,000 active arrangements for tax and student loan debt, covering $1.62 billion. 

Over the past couple of years, Te Tari Taake Inland Revenue has taken a supportive approach with student loan customers. We wanted to keep borrowers engaged  even if they could not make a loan repayment.

As at June 2023, 94% of New Zealand-based customers and 26% of overseas-based borrowers were making required repayments.

In the second half of the year, we generated an extra $2.3 million in repayments by contacting 46,000 overseas-based customers and reaching out through social media.

Starting in April 2023, we have sent approximately 3,000 cases a month to third parties in Australia that can pursue collection, and recently 300 cases to a UK collector. Third-party collection is showing good results–it contributed $10 million of the overall $40 million in repayments made in the final 3 months of this year.

Another way to help customers overcome short-term issues is the Commissioner’s ability to offer tax relief in the form of writing off tax. Government allocates an amount for write-offs every year.

This year, 213,000 customers in difficult financial circumstances were granted a write-off. 

In response to COVID-19, we applied an indicator in our system in 2020 that identified around 400,000 businesses that qualified for relief from penalties and interest if they paid their core tax. This has prevented around $524.8 million in debt from going into the tax system since 2020. 

We have begun to retire use of this COVID-19 indicator for recovering businesses, although we continued to write off penalties and interest for those still affected this year.

Despite our efforts, a number of customers do not engage with us. This year, we contacted 2,850 customers with a notice of legal proceedings - these are customers with significant debt who have demonstrated insolvent behaviours. 

35% of those contacted settled their tax in full or through instalment arrangements or part-payments. Where appropriate, customers received a write-off. 

Stepping up liquidations activity

40% of the 2,850 businesses we contacted took no action—a next step is to begin the liquidations process. We served over 1,000 statutory demands this year.. 

Liquidation is an essential role we play to stop unviable businesses from incurring more debt, support the trading community and ensure a level playing field for businesses that are meeting their tax obligations. 

Across the trading community, 1,929 businesses entered formal insolvency this year, compared to 1,347 in 2021–22. Approximately 75% of these customers had a tax debt.

Te Tari Taake Inland Revenue will keep using marketing and education to reach customers missing payments, and data to tailor approaches to help them. 

We’re having good success upskilling our people to be able to negotiate appropriate solutions with customers facing debt.

We also continue to liquidate unviable businesses, and focus on employer debt and the few customers with high-value debt.

As at 30 June 2023, GST debt accounts for 39% of overdue general tax and Working for Families debt. We are seeing the impacts of economic conditions on customers such as sole-traders and small-to-medium-sized businesses. Some have faced tough choices about who and when they pay. 

We are taking preventive measures to halt this growth.

  • $5.8 billion in general tax and Working for Families debt was overdue at 30 June 2023 
    • 2022: $4.8 billion
    • 2021: $4.4 billion.
  • As at 30 June 2023 524,000 customers had a tax payment that was overdue 
    • 315,000 customers owed less than $1,000.
  • $754 million of debt was written off or remitted this year 
    • 2022: $689 million.
  • $231 million of the $754 million written off was penalties and interest remitted for customers impacted by COVID-19.
Last updated: 18 Dec 2023
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