Lift in enforcement activities

IR is scaling up and creating a strong pipeline of enforcement activities. As at 30 June 2024, we had closed 4,344 audits, 20% more than last year. We have active audits underway, including hidden economy cases, technical non-compliance, fraud, COVID-19 eligibility reviews, annual reviews of significant enterprises and property arrangements.

Increased liquidation activity has also heightened awareness that IR will act and has been a driver for directors to place companies into voluntary liquidation. While these customers represent a very small proportion of taxpayers, their impact on tax debt and public perceptions of the tax system is significant. Insolvent businesses take trade from businesses working to do the right thing.

$1.26 billion is owed by 4,429 companies in liquidation. A total of 2,072 companies went into liquidation this year (including the 437 liquidated by IR); 88% of these had a tax debt.

Prosecutions

IR completed 31 prosecutions for tax evasion, knowledge offences and Crimes Act 1961 offences in 2023–24 compared to 34 cases in 2022–23. This reduction in completed prosecutions reflects the reprioritisation of our compliance work programme in previous years to support customers through COVID-19 alert-level changes and deliver initiatives. With redirecting efforts back to compliance activities, prosecution numbers are expected to increase. 

As at 30 June 2024, there were 85 active cases before the courts. 

IR considers a number of factors when looking at potential prosecutions, including a history of non-compliance, the gravity and prevalence of offending and loss to the tax system or damage to the system’s integrity. Other considerations are misuse of corporate entities for a criminal tax purpose (for example, using multiple entities to facilitate GST fraud) and whether there are organised and/or systematic attacks on tax or social policy systems. 

Given the interest in our prosecution work, we have continued to publicise the outcomes from court cases, in part to illustrate the role IR plays in protecting businesses from competitors that avoid their obligations. 

For example, we are taking a proactive approach towards taxpayers who continue, despite prohibition, to act as a company director or be involved in the management of a company. Automatic prohibition provisions within the Companies Act 1993 come into effect where a person has been convicted of certain types of tax offending. We recently contacted one taxpayer to advise him that his convictions for failing to account to the Commissioner for $560,000 of employer-related deductions (including PAYE and KiwiSaver) had resulted in automatic prohibition.

Compliance results

$9.50 was the identified value of compliance activities over associated costs.

• 2023: $9.04
• Target: $10.00

$975m from interventions that identified revenue and recovered or disallowed expenditure 2023: $973m