This year, we have used a range of ways to collect more debt and minimise the impacts of uncollectable debt on government, individuals and companies. $4.3 billion in tax and entitlements debt was collected, $252 million more than 2023–24. Student loan repayments by overseas-based borrowers were $70 million higher.
Debt management is part of our wider compliance approach and requirement to maximise revenue, collect more debt before it gets too old and minimise write-offs. Aged debt is harder and more costly to collect.
While nearly 98% of customers paid their tax either on time or within 6 months, that did leave 527,000 customers with an overdue debt at 30 June 2025.
Recent growth in tax and entitlements debt is mainly due to the economic conditions of the past few years. Overdue GST and employer-related debt is particularly prevalent amongst smaller businesses.
Overall growth is also due to IR updating the definition of when tax debt becomes overdue to ‘straight after the due date’. Previously, it was treated as overdue when we began action to collect it.
The change in definition has resulted in higher reported debt balances. If the previous definition had been applied, the reported overdue tax and entitlements debt balance at 30 June 2025 would have been $163 million lower. Other previous changes in the definition of overdue tax are discussed on page 23 of our 2023–24 Annual Report.
Overdue debt across all our products amounted to $13.1 billion.
Intensified focus on debt recovery
As a part of the Government’s Budget 2024 investment in compliance activities, funding and resources were invested to increase the amount of overdue tax collected and repayments made by overseas-based student loan borrowers.
We have been running proactive campaigns across customer groups through direct phone contact, SMS messaging and tailored support.
Our efforts are informed by factors such as understanding customers’ property holdings and advising customers of the potential to issue section 157 notices on bank accounts. Section 157 notices require third parties such as banks and employers to make payments to us from any funds available to a customer who is in default. We’ve issued 19% more notices this year.
Building our people’s expertise in debt collection has been an ongoing focus for IR. It requires a range of skills, with staff needing to be empathetic but persistent in negotiating solutions. It can include investigating customers with significant histories of non-compliance.
In June 2025, we launched a new decision-support tool for staff. It is reducing manual effort, enabling more consistent prioritisation of cases and helping our people to respond faster and offer tailored repayment options based on the customer’s situation.
Tax and entitlement debt as at 30 June 2025
GST:
- $3.3 billion
- 15% higher than 30 June 2024
Income tax individuals:
- $2.3 billion
- 12% higher than 30 June 2024
Employer activities:
- $2.0 billion
- 34% higher than 30 June 2024
Income tax non-individuals:
- $1.2 billion
- 10% higher than 30 June 2024
Tax credits and entitlements*:
- $0.3 billion
- 6% higher than 30 June 2024
*The 2024 comparison reflects alignment with 2025 changes to debt group categories.
Other tax debt:
- $0.2 billion
- 2% lower than 30 June 2024
Debt under active management
Across all of our debt products, IR has encouraged customers to set up repayment plans that give them manageable, sustainable ways to get back on track.
As at 30 June 2025, 22% of collectable tax debt value was under an active plan (meaning customers have missed no instalments).
In June 2025, we piloted a new intervention in myIR, offering customers pre-approved repayment plans automatically. Early results indicate good uptake.
We continued to do what we can to help solvent companies keep trading this year, but we also recognise that the economy, especially other businesses, need us to wind up companies that aren’t viable.
While these customers represent a very small proportion of taxpayers, their impact on tax debt and public perceptions of the tax system is significant. The vast majority of debt will not be recovered from companies in liquidation.
We referred 650 cases to the Court for liquidation orders, a 49% increase on last year. This has heightened awareness that IR will act. It’s been a driver for some directors to put themselves into liquidation.
IR can also initiate bankruptcy proceedings: 209 customers were referred for bankruptcy this year and 124 customers were made bankrupt by IR. Not all proceedings end in bankruptcy for a number of reasons, most commonly because people contact us to make a payment or set up a repayment plan.
The role of write-offs
Debt can be written off under some circumstances. It’s one tool IR uses within the overall aim of maximising revenue over time. For example, the main reasons for writing off debt this year were liquidations, cases where customers simply couldn’t pay and were in serious hardship or cases where it wasn’t a good use of our resources to keep pursuing a debt.
IR wrote off $804.7 million of debt this year, compared to $889.9 million in 2023–24 (this amount included COVID-19 remissions, which finished in April 2024).
Overseas-based student loan borrowers
IR has renewed the focus on increasing repayments from student loan borrowers who are based overseas. 31% of this group complied with repayment obligations this year. This is 2% percentage points higher than last year, but still a situation we’re working to improve.
Overseas-based borrowers owe most of the overall student loan debt, and most of that is owed by people who left New Zealand years ago and have not engaged with us in decades.
We have increased efforts to locate and engage overseas-based customers by investing in additional staff. This included proactively reminding passport applicants of their overseas obligations and offering repayment plans to reduce late-payment interest.
Other strategies included taking legal action over the most challenging cases, contacting returning customers with significant debts and using advertising and social media to reach borrowers.
Finding borrowers overseas who haven’t kept their contact details up to date has been a longstanding issue. We’ve grown our partnerships with debt collection agencies in the UK and Australia and worked with the Australian Tax Office to locate borrowers there.
Working with the New Zealand Customs Service has also made a difference as it alerts us when a borrower in debt arrives in the country.
The main types of tax and entitlements debt collected
- GST $1.73 billion
- Non-individuals income tax $832 million
- Individuals income tax $804 million
- Employers $725 million.
Small Business Cashflow loans due
Five years after the introduction of the Small Business Cashflow Scheme (SBCS), loans began to mature in May 2025.
More than 129,000 businesses were issued loans totalling $2.4 billion. While a total of $1.6 billion in loans has been repaid, nearly 28,000 businesses were in default or had missed their repayments as at 30 June 2025.
We continue to support customers who have missed or defaulted payments to help them get back on track. For example, approximately $10 million in SBCS and other tax debt has been recovered in a recent campaign targeting those customers.
Non-tax debt overdue
At 30 June 2025
Student loans:
- $2.51 billion
- 6% higher than 30 June 2024.
Child support:
- $913.3 million*
- 9% lower than 30 June 2024.
- *This includes $658m owed to the Crown.
Small Business Cashflow Loans:
- $383.6 million
- 183% higher than 30 June 2024.
All overdue debt, tax debt included
At 30 June 2025
- $13.1 billion
- 14% higher than 30 June 2024.
Compliance with non-tax obligations
- 83% of all student loan borrowers were meeting their obligations, slightly higher than last year (target: 85%).
- 84% of New Zealand liable parent child support debt cases were resolved within 12 months, slightly higher than last year (target: 80%).
- 76% of child support customers were paying in full and on time, up from 73% last year (target: 70%).
- 66% of all child support debtors had an active repayment plan in place.