This category is limited to activities to prevent returns and debt becoming overdue, and to collect unfiled returns and overdue payments, whether for the Crown, other agencies or external parties.
What we do
IR seeks to achieve the timely and efficient collection of unfiled returns, revenue and debt owed. We believe the best approach for managing debt and unfiled returns is by helping customers get it right from the start and by acting if they choose to do the wrong thing. We do this by:
- understanding our customers, their circumstances and their experiences and dealings with us and other government agencies
- using analytical capabilities to anticipate what customers may need from us to help them stay on track
- reaching customers who need our help earlier by tailoring our approach and messages to them
- ensuring that policy settings reflect a whole-of-government approach and support consistent customer experiences
- equipping our people to support customers in debt.
When customers do get into debt, we help them work through their options and create a plan that suits their specific circumstances. We are required under section 6A of the Tax Administration Act 1994 to collect the highest net revenue over time, considering the resources we have available, levels of voluntary compliance and compliance costs.
How we performed
This year, we increased our compliance and enforcement work and focused on getting overdue returns filed and recovering more tax and overseas-based borrower debt.
Economic conditions are impacting customers’ ability to pay. Total overdue tax debt increased to $7.94 billion as at 30 June 2024. The increase is a result of the challenging economic environment and a redefinition of overdue debt (see page below for more about this).
4 billion in tax debt collected
In 2023–24 we:
- collected $4.07 billion cash from debt activities
- assessed $1.71 billion of tax revenue from overdue returns being filed.
Debt
This year, overdue tax debt increased to $7.94 billion (excluding student loans, child support and COVID-19 support products). The increase is a result of the challenging economic environment and changes to reporting and definitions of overdue debt. Seehere for details on debt. Almost half of customers with GST or employer debt only had debt for 2023–24, indicating the challenges businesses have been experiencing.
The increase in overdue tax debt had an associated increase in the impairment and write-offs expense as did our reclassification of some overdue tax debt. As noted here, expenditure on impairment and write-offs was higher than appropriated.
GST, income tax and employer activities debt
Many New Zealanders are struggling with the current economic environment and those experiencing cash flow difficulties will sometimes stop paying their tax as an option for managing their immediate financial difficulties. Our deferral of some proactive debt recovery in 2023 also likely contributed to some of the increases.
Our plans to address this increase in debt include:
- increasing staff to scale up our debt activities, particularly for those with high-value debt
- an increased effort pursuing overdue returns, including prosecution activity for extreme examples of non-compliance
- new and increased use of data to better target high-value debtors such as property, crypto and payment service provider data
- a continued focus of GST and employer debt, and
- providing stronger messaging to customers not engaging with us to take immediate action before we start legal recovery procedures.
Working for Families Tax Credit (WfFTC) debt
WfFTC debt increased by $27.9 million from 2022–23. This increase reflects that income variability continued to affect the accuracy of customers’ payments during the year.
We try to help customers avoid getting into debt by identifying who might be at risk of being overpaid, communicating with them during the year and adjusting their payments if necessary.
Social policy debt
Child support debt
Child support debt has dropped steadily over the last 5 years. See here for more information on this:
Giving New Zealanders certainty and options
| Child support debt | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Total debt value | $2,151 | $1,366 | $1,188 | $1,098 | $1,005 |
| Penalties only | $1,553 | $726 | $586 | $504 | $425 |
Note: The past due child support gross receivables on the page below comprises penalty and Crown entitlement debt. This differs to the total debt reported above as it does not include non-custodial parent assessment debt payable to the receiving carer.
Note 4 - Receivables - child support
Student loan overdue debt
As at 30 June 2024, overdue student loan totalled $2.4 billion, 7.4% more than last year.
| Student loan debt | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| New Zealand-based borrowers | $133.1 | $140.9 | $152.4 | $168.1 | $175.6 |
| Overseas-based borrowers | $1,446.2 | $1,579.6 | $1,870.3 | $2,042.7 | $2,199.3 |
| Total | $1,579.2 | $1,720.5 | $2,022.7 | $2,210.8 | $2,374.9 |
Most outstanding repayment obligations are for overseas-based borrowers. Read more about our debt work here and here:
4 billion in tax debt collected
Management of debt and unfiled returns
Detailed reporting on the Student Loan Scheme is available at
educationcounts.govt.nz/publications
COVID-19 support product overdue debt
As at 30 June 2024, debt for COVID-19 support products was $167.1 million, 61% more than last year. The increase is due primarily to repayment requirements for the Small Business Cashflow Scheme (SBCS). In total, $2.4 billion in SBCS loans were issued to 129,495 customers. As of 30 June 2024, over half has been repaid. Customers are required to make regular repayments from year 3 of the loan and repayment plans are automatically issued to the customer. If the customer does not comply with that plan, this constitutes a default. Over 10,000 customers have SBCS loans in default.
| COVID-19 support product | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Resurgence Support Payment |
$0.1 |
$3.5 |
$13.9 |
$19.3 |
| Covid Support Payments |
- |
$1.2 |
$7.8 |
$11.2 |
| COVID-19 Resurgence Support Payment and COVID-19 Support Payment |
$0.1 | $4.7 | $21.7 | $30.5 |
| Small Business Cashflow Scheme |
$6.7 | $29.0 | $82.4 |
$136.6 |
| Total | $6.9 | $33.7 | $104.1 | $167.1 |
Write-offs, liquidation activity and unfiled returns
Write-offs
We write off debt in cases of serious hardship, bankruptcy or liquidation or if the cost of collecting the debt is uneconomical. This year, we wrote off $694.5 million of debt using these provisions compared to $523.5 million in 2022–23.
| Write-offs | 2021-22 | 2022-23 | 2023-24 |
|---|---|---|---|
| General write-offs | $512.6 | $523.5 | $694.5 |
Note: Write-offs include general tax, Working for Families Tax Credit and KiwiSaver.
We also supported customers following the COVID-19 pandemic, applying specific legislative powers to write off penalties and interest, where possible. We remitted at total of $195.4 million using these provisions.
Liquidation activity
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. $1.26 billion of the tax debt book is owed by 4,429 companies in liquidation. This year, to 30 June 2024 we have:
- issued over 1,334 statutory demands
- liquidated 437 companies
- bankrupted 90 individuals.
Unfiled returns
At 30 June 2024, 1.539 million outstanding returns were yet to be filed, including 698,000 for individual income tax, 419,000 for non-individual income tax, 370,000 for GST, 18,200 for employer activities and 33,000 for other tax products. This is a 2.4% increase of total outstanding returns as at 30 June 2023 (1.502 million).
Our focus on high-value returns resulted in $1.71 billion in assessed revenue from late filed returns, $331 million more than in 2022–23, achieving $71.57 of assessed revenue for every unfiled return dollar spent.
Performance measure results
This year, we achieved 6 out of 8 targets, the same as 2022–23.
Performance measure results
This year, we achieved 6 out of 8 targets, the same as 2022–23.
| Performance measure | 2022-23 actual |
2022-24 target | 2022-24actual |
2024-25 target |
|---|---|---|---|---|
| Value of assessed revenue for every unfiled return dollar spent | $60.12 |
$45.00 | $71.63 (achieved) | $45.00 |
| This measure demonstrates the cost-effectiveness of our work to recover assessed revenue from returns not filed by the due date. We targeted unfiled return activity and used analytical tools to identify unfiled returns that were likely to be of higher value. This work resulted in $1.71 billion in assessed revenue. | ||||
| Cash collected for every debt dollar spent | $47.11 | $40 | $67.69 (achieved) | $40 |
| This measure demonstrates our cost-effectiveness in collecting overdue debt. The improved result in part reflects that there is more debt to be collected as overall tax debt continues to grow. |
||||
| Percentage of child support assessments paid on time |
70.8% |
70% | 72.5% (achieved) | 70% |
| Percentage of student loan customers that meet their obligations | 83.1% |
85% | 82.9% (not achieved) | 85% |
| Not achieved—This measure looks at compliance levels for student loan borrowers. Repayment levels for New Zealand-based borrowers remain high at 94.6%, up slightly on 94.3% for 2022–23. Repayments from overseas-based customers remain low at 29.3 % but improved slightly from 26.4% in 2022–23. Improving collection from overseas-based borrowers is a priority for 2024–25. |
||||
| Percentage of unfiled returns that are finalised within 6 months |
41.1% |
60% | 42.3% (not achieved) | 60% |
| Not achieved—This measure demonstrates the level of activity focused on helping customers with unfiled returns. A slight improvement in results in 2024 reflects returning to a more balanced work programme and more proactive compliance activities. We continue to focus on finalising returns of higher value, assessing $1.71 billion in revenue from late filed returns. We also continue to reduce unnecessary return filing such as moving IR3 filers to the individual income tax assessment automated process. |
||||
| Percentage of collectable debt value over 2 years old | 33.4% |
40% or less | 32.2% (achieved) | 40% or less |
| Percentage of new customer debt resolved within 6 months | 58.6% | 50% | 58.3% (achieved) See here |
50% |
| This measure focuses on customers who have recently gone into debt and the debt being cleared in a timely manner. | ||||
| Percentage of New Zealand liable parent child support debt cases resolved within 12 months | 84.0% |
75% | 83.7% | 80% see here |
All targets are unaudited.
What it cost
| Actual 2023 ($000) | Actual 2024 ($000) | Unaudited revised budget 2023 ($000) | Unaudited budget 2023 ($000) | Unaudited forecast 2024 ($000) | |
|---|---|---|---|---|---|
| Revenue | |||||
| Revenue from the Crown | $90,489 | $84,522 | $84,522 | $96,969 | $104,405 |
| Other revenue | $471 | $187 | $1,272 | $1,272 | $1,272 |
| Total revenue | $90,960 | $84,739 | $85,824 | $98,241 | $105,677 |
| Total expenses | $85,511 | $83,886 | $85,824 | $98,241 | $105,677 |
| Net surplus or (deficit) | $5,449 | $853 | - | - | - |