The taxes we collect for the Government help to fund things like education and healthcare. Taxes also provide money that’s paid out in benefits and entitlements to hundreds of thousands of New Zealanders every year through different government agencies.
Revenue trend over time
Indicator trend: improved.
Tax revenue in 2024 was $115.4 billion.
| Year | Revenue |
|---|---|
| 2020 | $77.7 |
| 2021 | $93.8 |
| 2022 | $100.6 |
| 2023 | $104.5 |
| 2024 | $115.4 |
Most of the annual growth in tax revenue is in deductions from salary and wages, GST net of refunds and resident withholding tax (RWT) on dividend and interest. The growth in deductions from salary and wages was $4.8 billion (10.4%), reflecting salary and wage growth and the associated increase in tax as more income is earned in higher tax brackets. Net GST grew by $3.4 billion (13.0%) as a result of growth in domestic consumption, partially offset by less GST from residential investment. Net GST collected by IR was further boosted by a decline in imported goods, which results in smaller refunds. The increase in interest RWT reflects increased interest income (a mixture of interest rates and deposit base). The increase in dividends is likely to be a one-off, reflecting a behavioural change in advance of the 39% trustee rate taking effect. Tax revenue forecasts are provided in the Vote Revenue Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2025.
Revenue through our interventions
Indicator trend: stable
We make sure customers are doing the right thing. The actions we take range from interventions that promote voluntary compliance and prevent revenue loss occurring in the first place to finding and correcting errors. A key building block of voluntary compliance is tax morale or the willingness to pay tax. Read more about customer perceptions of tax morale and trust in IR here:
We identified $975 million in revenue and recovered or disallowed expenditure through our interventions.
Our compliance interventions supported the integrity of the government accounts from:
- Identifying tax position differences through our investigation activities, which assessed $460 million in additional tax. The $63 million increase from 2023 reflects the increased focus on investigation activities in 2024.
- Voluntary disclosures by customers that resulted in $322 million in additional revenue. Of this, $94 million came from return reviews reported in the $230 million noted below.1 A change in methodology for 2024 means we are now including more voluntary disclosures. Using this improved approach for 2023, we would have reported voluntary disclosures of $291 million (compared to the $219 million reported in our 2023 Annual Report).
- Real-time reviews of returns that stopped $230 million in incorrect or fraudulent refunds and tax deductions at the time of filing, $85 million more than 2023.
- The use of our tools, data and intelligence to ensure the integrity of COVID-19 products, identified $57 million from declined applications or post-payment reviews. This is an expected drop as most of the applications for these products closed in 2022–23, with Small Business Cashflow Scheme applications closing in December 2023.
We assured a further $91 million in revenue for the next 3 years.
Some interventions result in assurance that future revenue will be returned correctly through changes in customer behaviour and an increased understanding of their obligations. We estimate how much additional revenue is assured in future years.2
1A change in methodology for 2024 means we are now including more voluntary disclosures. Using this improved approach for 2023, we would have reported voluntary disclosures of $291 million (compared to the $219 million reported in our 2023 Annual Report).
2Future revenue benefit quantifies the effects on our compliance interventions on customers’ future behaviour. The estimated future revenue assured is the value of prevented revenue loss through audit activity and specific campaign results forecast over 3 years.
Providing certainty
Trend indicator: improved
This year, we ruled on arrangements worth:
- $18 billion
- with associated tax of more than $4.6 billion.
Our experts provide certainty for customers on specific tax positions. Private rulings provide our interpretation of how the law applies in specific circumstances. See here for more information.
On 30 June 2024, 88 customers had active advance pricing arrangements with us, representing approximately $400 million in assured tax each year.
Advance pricing agreements provide customers with certainty on tax for specific transfer pricing arrangements for an agreed period. In return, New Zealand gets a level of certainty that these businesses are paying the right tax for that period of time.
Total tax debt to tax revenue
Trend indicator: target achieved
One of the ways we measure progress towards our revenue outcome is looking at the amount of overdue tax debt as a percentage of tax revenue.
6.6% of overdue general tax debt to tax revenue
The ratio of overdue general tax debt to tax revenue reflects an increase in overdue general tax debt, reflecting the challenging economic environment and changes in our definition of overdue tax debt. Tax revenue increased by 10.5% on 2023. Due to changes in debt reporting, this is not directly comparable to prior years.
The ratio compares favourably with other similar tax administrations, some of which have ratios of as much as 10% to 17%.
Read more about debt and what we’re doing to address debt growth here and here.
Note: Overdue general tax debt and tax revenue figures used in this calculation exclude child support, student Loans, Working for Families Tax Credits and COVID-19 support products.
Cost of collecting $100 in tax revenue
Trend indicator: stable
The indicator provides an overall measure how efficiently we collect tax revenue. The ratio compares the operating costs with the total tax revenue assessed.
| Year | Cents to collect $100 |
|---|---|
| 2015 | 80 |
| 2023 | 43 |
| 2024 | 45 |
The cost to collect $100 of tax revenue increased marginally from 43 cents in 2023 to 45 cents in 2024. The increase is a result of a 14% increase in costs compared with a 10.5% growth in tax revenue. The main driver for the increase in costs was from the Public Sector Pay Adjustment.