New Zealand has a high level of voluntary compliance when it comes to people paying tax, with little to no contact needed with IR. Nearly 9 out of 10 payments were on time this year. IR has worked to assess and collect tax efficiently and ensure core tax revenue continues to be reliable from year to year. Tax revenue for this year was $115.4 billion, 10.5% more than in 2022–23.
We have continued to focus on delivering efficiencies across our operations and optimising resources.. This is freeing up more time to tackle non-compliance and implement the Government’s priorities. However, as you can read on the page below, there has a been a notable net growth in overdue tax debt alongside revenue. We have lifted efforts to collect unpaid tax and actively manage overdue debt.
4 billion in overdue tax debt collected
Compliance from the start
Designing compliance into our systems and processes lies behind the success of key IR tax events, digital services for businesses and effective implementation of Government policy changes.
The tax event most New Zealanders experience every year is an individual income tax assessment, where we automatically calculate and finalise their tax for them. IR sends out assessments over May to July. As at 30 June, 3.6 million customers had received their assessment and 82% had effectively completed their tax obligations for the year.
IR has run these assessments since 2019, refining the process each year—we sent 221,000 more automatic assessments than in 2023 by removing out-of-date income source information that would require people to manually file.
Systems design also ensures a significant amount of non-compliance is prevented at the earliest opportunity possible. Our systems automatically screened 9.7 million returns this year, stopped 134,000 returns that did not look right for review and processed the rest quickly. $230 million in incorrect or fraudulent refunds and tax reductions were stopped at the time of filing.
Promoting compliance in the community
While IR is a highly digital organisation, we also need to be visible in communities to help people get their tax right and reinforce that we’re looking for wrongdoing. This year, our community compliance teams have offered targeted support to many communities, including new migrants, businesses and customers affected by the weather emergencies in 2023.
Targeted support means tailoring our education to intrude into people’s lives as little as possible while providing the right tools and information. For example, we hosted tax workshops for 2,500 businesses and sole-traders and visited 1,660 customers to explain our services and talk through any areas of concern.
At an expo at Unitec in May 2024, most of the students we talked with were in their last year of study to become electricians, builders and mechanics and were keen to understand the different compliance efforts involved in working for a company versus being self-employed.
We covered income tax, PAYE, business structures and expenses, compliance and withholding tax, and emphasised the overall importance of self-employed customers being proactive about paying tax and keeping good records.
| Year | Payments by volume | Payments by value |
|---|---|---|
| 2024 | 88.2% of the tax payments that customers made were on time and in full | 94.0% of the value of those tax payments was paid on time, which totalled $106.9 billion |
| 2023 | 88.8% | - |
| 2022 | 89.4% | - |
See more
There is more on revenue in our detailed performance section and in the financial schedules and notes.
Schedule of Non-departmental Revenue
Reducing the effort for businesses
In line with the Government’s priority of reducing compliance costs for individuals and businesses, IR continues to look at what we can do for small-to-medium-sized businesses (SMEs). It’s important because our research suggests SMEs have the highest compliance costs relative to the amount of tax paid. We aim to reduce the time and money spent on compliance so there’s more time to run and grow their businesses.
As you can read in our final report on the benefits gained from IR’s business transformation, the time taken by SMEs to complete their tax has reduced, but not by as much as expected. The cumulative value of the time saved by SMEs on compliance was $650 million.
Outcomes of the transformation programme
In our latest 2024 survey of SMEs, a fifth of respondents said IR had made compliance easier this year by doing things such as improving the user-friendliness of myIR, providing useful online calculators and ensuring our systems are compatible with accounting software. Factors that made it harder included changes to the tax and social policy system, meeting filing and information requirements and increased professional advice and software costs.
As well as offering assistance to businesses just starting out and those looking to grow, IR has a number of initiatives underway to reduce the compliance effort, including:
- simplifying the notifications we send businesses to ensure they are easy to understand
- ensuring they are aware of important information such as interest accruing on a Small Business Cashflow loan
- developing a more efficient and fair way to deduct withholding tax by percentage of income
- simplifying the compliance process by reforming trust tax returns to better align with financial statements and other related resources.
Reducing uncertainties for larger companies
New Zealand’s larger companies—we term them significant enterprises—are vital to the economy, because of the amount of tax revenue they pay and because of the PAYE they deduct and pass on. This year, 98.6% of their payments were on time and in full.
Reducing uncertainty for larger companies is highly important to an effective tax system because their transactions usually involve significant money and are complex. IR provides tailored account management for the biggest companies. This year our work included:
- helping some companies to reduce errors in their employment information that cause rework
- improving tax governance
- providing high-calibre advice on the interpretation and application of tax law.
Providing certainty to corporates helps to increase the proportion of revenue from year to year that can be considered as ‘assured’—meaning that we are confident the right amount of tax will be paid in the future. This year saw corporates continue to set up advance pricing agreements with IR, which give them upfront certainty of their international transfer pricing arrangements. These agreements represent approximately $400 million in assured revenue.
Certainty in interpreting tax law
The services of our Tax Counsel Office foster compliance through providing clarity and certainty on tax law so that customers can enter into commercial transactions with confidence.
The Tax Counsel Office has provided a range of advice and rulings on our interpretation of how a tax law applies to a particular arrangement—private rulings that customers can obtain for a fee. These provide certainty on the tax position for a wide range of transactions as they are binding on the Commissioner of Inland Revenue if the taxpayer applies the ruling (and meets certain legislative requirements).
This year, we ruled on arrangements worth $18 billion, with associated tax of more than $4.6 billion. Some of the significant transactions ruled on covered business disposals and reorganisations, employee share schemes, financing arrangements, bank capital structure requirements, life insurance and reinsurance and infrastructure transactions, and overseas investment in New Zealand.
The Office also provides a range of public advice and guidance on particular issues that provide certainty and predictability of IR’s position to tax advisors, customers and our people. There’s more on this here:
Services to Ministers and to inform the public about entitlements and meeting obligations
Overall feedback from our customers shows an appreciation of the criticality of both private rulings and public guidance.
Customer feedback from 2023 on the Tax Counsel Office’s private rulings illustrates their importance to businesses:
"The rulings provide an opportunity to obtain a clear, considered and neutral view of the relevant tax issues before a final tax position is taken as compared to the uncertainty of an audit or dispute.”
A customer on our public guidance
"We welcome Inland Revenue’s efforts in providing guidance on the application of the income tax rules to general and limited partnerships. The application of these rules can be challenging, especially in the light of the complex commercial arrangements that have been developed in the market in relation to these structures (and in particular in the context of limited partnerships, which are increasingly the favoured structure for infrastructure and property investments).”
Implementing the trustee tax rate change
Following on from an increase in the top personal income tax rate to 39% for the 2022 tax year, IR implemented an increase in the tax rate for trusts to 39% from 1 April 2024. The Government’s intent behind the new rate was to align the trustee rate with the top personal rate.
IR has engaged widely with the tax community about the comprehensive compliance approach we will be taking and the intelligence we are using to identify and monitor non-compliance. Information disclosed from 400,000 trusts for the 2022 and 2023 tax years will be critical to identifying customers with significant changes in income-generating assets, arrangements with associates such as loans and tracking changes in income allocation to beneficiaries.
We have emphasized that we can monitor and validate what customers are doing in real time and that use of external datasets is improving our understanding about the relationships between wealth, assets and corporate structures.
Customer experience and attitudes to tax
We acknowledge that it’s not always simple for some customers to deal with us: families who receive tax credits, small businesses, tax agents or customers who pay child support need to get in touch during the year. Their satisfaction with our services is driven by each interaction.
Customer perceptions about satisfaction and ease in getting information from IR remained stable. IR still has work to do to improve our timeliness in responding to correspondence from customers. This includes a focus on improving e-notifications, the 35 million electronic communications sent a year requesting that customers do or read something.
We have invested in further simplifying processes where we can, automating simpler tasks, working to resolve their issues in 1 contact and managing spikes in customer demand driven by key tax events. Using a new cloud-based voice channel platform, launched in November 2023, we have answered more calls and kept to within target for our speed to answer them.
We’ve also continued to improve our services to tax agents, who play a key role in the tax system by handling the tax affairs of a quarter of IR customers. We provide dedicated account management and conduct weekly surveys to understand their experiences interacting with us.
Tax agents’ overall satisfaction has continued to improve over the past 5 years and their ease of interacting with IR remains high. We're staying focused on helping to reduce the number of contacts needed to resolve agents’ queries, including identifying training for them to get the most out of myIR.
Overall, the tax and social policy system relies on people’s trust and willingness to pay voluntarily so we work hard to encourage helpful attitudes to paying tax. Trust in IR has started to recover following declines over the past 3 years. More customers agreed they feel good about paying tax and that IR will help them when they are trying to do the right thing.
Customer experiences
70% were satisfied with their last interaction with IR.
- 2023: 69%
- 2022: 70%
72% of customers said it was easy to get the information they needed from IR.
- 2023: 72%
- Target: 70%
There's more information on customer experiences in our detailed performance section on customer outcomes and services.
Attitudes about tax
61% of customers have trust in IR.
- 2023: 57%
- 2022 60%
60% of customers surveyed felt good about paying tax.
- 2023: 58%
- 2022: 58%
65% agreed IR will help them when they are trying to do the right thing.
- 2023: 60%
- 2022: 61%
Customer voices:
"Saying thanks for all the work you do. I noticed in the letters you sent me for my income tax assessment you had a paragraph thanking me for paying tax and listed some of the things taxes are used for. I just want to say that I appreciate the fact that you took the effort to be appreciative.”
“As a new business owner it can be hard to navigate so many tax-related obstacles before being able to afford professional accounting software, but your customer services officer made things a lot easier by understanding my small errors and helping them to correct them.”
Efficiencies and effectiveness
IR completed or progressed 69 initiatives this year intended to improve efficiency and effectiveness across our services.
3 efficiencies that saved time and effort for customers
- IR’s new voice channel platform has expanded our ability to offer a callback option to customers. This helped increase the number of callbacks from approximately 40,000 in 2022–23 to over 290,000 this year.
- To help reduce the number of unfiled returns that IR needs to contact customers about, we identified and removed 25,000 returns that were likely to have a nil assessment value.
- Our group that works with larger companies focused on working with customers more effectively to limit filing errors. Their work has contributed towards an increase in straight-through processing of employment information through our systems without further intervention.
A better end-to-end service for grieving customers
Each year, approximately 35,000 people pass away in New Zealand. IR was sometimes criticised by the media and customers for the way we dealt with deceased customer accounts, causing frustration and additional financial costs.
A networked team came together to implement process and operational changes, making it quicker and easier to finalise the tax accounts of family members who have passed away.
System changes made included:
- enabling the ability to view customer credits, which has helped reduce complaints, customer contacts and manual reversals
- new KiwiSaver legislation enabled us to create a dedicated repository of critical executor and administrator information, which streamlines our ability to link up executors with KiwiSaver providers.
A consistent, well documented, and timely process is now applied to the treatment of all deceased customer accounts. This enables our people to support customers who are managing the affairs of a deceased loved one and reduces IR’s costs to administer these accounts.
Check out our property tax decision tool
We’re encouraging people to check out our updated property tax decision tool, which helps work out whether the sale of a property is taxable under any of the land taxing rules, including the bright-line test. The tool is available online at Buying and selling property (ird.govt.nz) and takes approximately 7 minutes to complete.