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Budget 2024: The Government has announced FamilyBoost, a proposed new childcare payment to help eligible families with the rising costs of Early Childhood Education (ECE). Find out more: Beehive.govt.nz

Te tari Taake 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 legislations governing Inland Revenue’s operations include the Public Finance Act 1989, and the Public Service Act 2020. 

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.

The reporting period for these financial statements is for the year ended 30 June 2023. The unaudited forecast financial statements are for the year ending 30 June 2024.

The Commissioner of Inland Revenue, as Chief Executive, authorised these financial statements on 29 September 2023.

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 Te Tai Ōhanga 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 2023 financial statements.

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.

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.

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 estimates 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). 

Significant accounting policies are included in the notes to which they relate. Significant accounting policies that do not relate to a specific note and that materially affect the measurement of financial results, the financial position and/or output statements within the Section on Our Performance, are outlined below.

PBE FRS 48 Service Performance Reporting replaces the service performance reporting requirements of PBE IPSAS 1 Presentation of Financial Statements. Inland Revenue has now applied

PBE FRS 48 with effect on its statement of performance information. This is disclosed here. 

Disclosure of judgements

We have adopted PBE IPSAS 41 Financial Instruments this year. This standard supersedes the interim Standard PBE IFRS 9 Financial Instruments with similar requirements. As a consequence, there is no significant change in accounting policy. 

All amounts in the financial statements, appropriation statements 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.

Commitments and contingencies are disclosed exclusive of GST.

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

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 amount, scope and period of its Vote Revenue appropriations.

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.

When the presentation or classification of items in the financial statements change, comparative figures for prior periods are re-stated 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.

Inland Revenue allocates costs directly to an appropriation where a line of sight exists between an appropriation and a cost centre or a project. Inland Revenue utilises indirect allocation where a cost centre or a project cannot be attributed directly to an appropriation. Indirect allocation rates are derived from the weighting of apportioned direct costs from relevant cost drivers to appropriations.

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 2022–23 are those included in The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2023.

The revised budget figures for 2022–23 (refer to the Statement of Departmental 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 2023.

Statement of Non-Departmental Budgeted and Actual Expenditure Incurred Against Appropriations

Any significant changes to the forecast included in the Pre-election Economic and Fiscal Update 2023 are provided in the footnotes to the Statement of Non-Departmental Budgeted and Actual Expenditure Incurred Against Appropriations.

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.

The forecasts have been compiled on the basis of existing government policies and ministerial expectations at the time the statements were finalised. The Commissioner, in his role as Chief Executive of Inland Revenue, is responsible for the forecast financial statements including the appropriateness of the assumptions underlying them and all other required disclosures. The Commissioner approved the forecast financial statements for issue on 18 April 2023. Although Inland Revenue regularly updates its forecasts, it will not publish updated forecast financial statements for the year ending 30 June 2024.

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 ceased in 2021–22, with some residual transformation activities post the closure of the programme to occur up to 2023–24.
  • Operating costs are based on historical information and Inland Revenue’s best estimates of future costs to be incurred for the delivery of its services.
  • Estimated year-end information for 2022–23 was used as the opening position for the 2023–24 forecasts.

Any changes to budgets during 2023–24 will be incorporated into The Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2024.

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
  • macroeconomic impacts on estimations, judgements and assumptions
  • the timing of expenditure relating to significant programmes and projects.
Last updated: 19 Dec 2023
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