Reporting entity
These non-departmental financial schedules present financial information on public funds managed by Inland Revenue (IR) on behalf of the Crown.
These non-departmental balances are consolidated into the Financial Statements of the Government of New Zealand for the Year Ended 30 June 2025. For a full understanding of the Crown’s financial position and the results of its operations and cash flows for the year, refer to the consolidated Financial Statements of the Government of New Zealand for the Year Ended 30 June 2025.
Reporting period
The reporting period for these non-departmental financial schedules is the year ended 30 June 2025. The unaudited forecast financial schedules are for the year ending 30 June 2026.
The Commissioner of Inland Revenue, as Chief Executive, authorised these financial schedules for issue on 30 September 2025.
Statement of compliance
The non-departmental financial schedules have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and the Treasury Instructions.
The Crown’s primary objective is to provide services to the public rather than to make a financial return and therefore it has been designated as a Public Benefit Entity (PBE) for financial reporting purposes. Accordingly, IR has applied the Tier 1 Public Benefit Entity International Public Sector Accounting Standards (PBE IPSAS) in preparing the 30 June 2025 financial schedules.
Basis of preparation
The non-departmental financial schedules have been prepared in accordance with the accounting policies included in the consolidated Financial Statements of the Government of New Zealand, Treasury Instructions and Treasury Circulars. Measurement and recognition rules applied in the preparation of these non-departmental statements and schedules are consistent with generally accepted accounting practice (Public Benefit Entity Accounting Standards) as appropriate for public benefit entities.
These financial schedules have been prepared on a historical cost basis, unless otherwise stated. The accrual basis of accounting has been used.
Functional and presentation currency
The non-departmental financial schedules are presented in New Zealand dollars, and all values are rounded to the nearest thousand dollars ($000). The functional currency of IR is New Zealand dollars.
Accounting standards issued and not yet effective
There are no relevant new standards that have been issued but that are not yet effective.
Significant accounting estimations, judgements and assumptions
In preparing these financial schedules, significant estimates, judgements and assumptions have been made concerning the future.
These estimates, judgements and their associated assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on experience, including expectations of future events that are believed to be reasonable under the circumstances, and other factors. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods if the revision affects both current and future periods.
The estimates and assumptions that have a significant risk of causing a material adjustment to revenue, and the carrying amounts of receivables and payables within the next financial year, are referred to in the notes. The most significant areas of uncertainties are:
- Estimation of income tax revenue for other persons and companies—Note 2 outlines the significant uncertainties, assumptions and sensitivities in estimating income tax revenue for companies and other persons for the year ended 30 June 2025. The methodology used to estimate income tax revenue for companies and other persons is based on macroeconomic forecasts. There is implicit uncertainty in the assumptions used in the macroeconomic forecasts.
- Impairment of tax receivables—Note 3 outlines the uncertainties, assumptions and sensitivities in estimating the value of tax receivables and the associated impairment as at 30 June 2025. The impairment of tax receivables is calculated based on expected future repayments. The future repayments are uncertain because they are dependent on macroeconomic factors and the repayment behaviour of debtors.
- Student loans—Note 6 outlines the significant uncertainties, assumptions and sensitivities in estimating the fair value of the student loan portfolio as at 30 June 2025. The fair value is based on expected future income levels and debt repayments. The expected future income levels and debt repayments are uncertain because they are dependent on macroeconomic factors and the behaviour of borrowers.
Changes in estimations
This year, IR refined key estimation approaches used in preparing these financial schedules. The refinements include:
Income tax revenue
The income tax revenue estimation methodology has been refined to recognise the estimated impact of significant new Government tax policies and rate changes from the first day of the new policy/rate change (rather than when the first impacted income tax return is filed). This aligns the timing of recognition with the taxable event but requires judgement and estimations as to the impact of the policy/rate change on revenue. Further detail and impacts are disclosed in Note 2.
Receivables
Refinements have been made to the data and modelling inputs used by the external valuer to estimate the impairment of tax receivables and to the definition of overdue debt. In addition, we have changed the assumptions used in estimating the fair value of provisional tax which is past its instalment date but not past the income tax return due date. Further detail and impacts are disclosed in Note 3.
Accounting policies
Significant accounting policies are included in the notes to which they relate. Significant accounting policies that do not relate to a specific note, and that materially affect the measurement of financial results, the Schedule of Non-departmental Assets, the Schedule of Non-departmental Liabilities, the Schedule of Non-departmental Capital Receipts, the Schedule of Non-departmental Gains and Losses and/or the Statement of Non-departmental Budgeted and Actual Expenditure Incurred Against Appropriations, are outlined below.
Expenses
Expenses are recognised in the period to which they relate.
Cash and cash equivalents
Cash and cash equivalents include cash in transit and funds held in bank accounts administered by IR. All cash is on demand and no interest is payable to IR.
Foreign currency transactions
IR does not have any material non-departmental foreign currency exposure. The risk of any material foreign currency exposure is borne by the customer when they enter into the transaction.
Fair value remeasurement
Fair value remeasurement is the change in the value of a loan portfolio over the year. Loans are initially measured at fair value. The changes to fair value between periods are recognised as a gain or loss in the Schedule of Non-departmental Gains and Losses. More information is provided in Note 5 for the Small Business Cashflow Scheme and Note 6 for student loans.
Comparatives
When the presentation or classification of items in the financial schedules change, comparative figures are re-stated to ensure consistency with the current period, unless it is impractical to do so.
Change in accounting policies
There have been no material changes in accounting policies since the date of the last audited financial schedules.
All accounting policies have been applied consistently throughout the year.
Budget and forecast figures
The budget, revised budget and forecast figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted in preparing these financial schedules.
The budget, revised budget and forecast figures are not subject to audit.
The budget figures for 2024–25 are those included in The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2025 or IR’s forecast information submitted to the Treasury for the Budget Economic Fiscal Update 2024.
The forecast figures for 2025–26 are those included in The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2026 or IR’s forecast information submitted to the Treasury for the Budget Economic and Fiscal Update 2025.
The forecast financial schedules have been prepared in accordance with the requirements of the Public Finance Act 1989 to communicate forecast financial information for accountability purposes. They are compliant with PBE Financial Reporting Standard 42 Prospective Financial Statements.
Forecast policies
The forecasts have been compiled on the basis of existing government policies and Ministerial expectations at the time the schedules were finalised. The Commissioner, in his role as Chief Executive of Inland Revenue, is responsible for the forecast financial schedules including the appropriateness of assumptions underlying them and all other required disclosures. The Commissioner approved the forecast financial schedules on 24 April 2025. Although IR regularly updates forecasts, it will not publish updated forecast schedules for the year ending 30 June 2026.
The main assumptions are:
- Tax revenue: tax policy changes enacted and announced by the Government will take place as planned and will affect tax revenue and receipts as calculated and agreed between IR and the Treasury.
- Student loans: the fair value of student loans is based on a valuation model adapted to reflect current student loans policy. As such, the fair value over the forecast period is sensitive to changes in a number of underlying assumptions, including future income levels, repayment behaviour and macroeconomic factors such as wage inflation and discount rates. Any change in these assumptions would affect the fiscal forecast.
- Small Business Cashflow Scheme: the fair value of the scheme over the forecast period is sensitive to changes in borrower repayments and defaults, which are based on volatile factors that are subject to change.
- Estimated year-end information for 2024–25 is used as the opening position for the 2025–26 forecasts.
For other key fiscal forecast assumptions, refer to the Budget Economic and Fiscal Update 2025
Budget Economic and Fiscal Update 2025 (PDF, 1,406 KB treasury.govt.nz)[1]
Any changes to forecasts during 2025–26 will be incorporated into The Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2026.
Variations to forecast
The actual financial results for the forecast period covered are likely to vary from the information presented in these forecasts. Factors that may lead to a material difference between information in these forecast financial schedules and the actual reported results include:
- changes due to initiatives or legislation approved by Cabinet
- macroeconomic changes impacting revenue, expenditure and debt levels
- the timing and number of customers’ filing of returns and related payments
- the timing and number of customer refunds, disbursements and credit claims
- the outcome of disputes, including litigations
- changes to the Commissioner’s interpretation and application of existing tax law through investigations, binding rulings and a variety of public statements.
The explanation of significant variances between the 2024–25 results and the related forecast are provided in the consolidated Financial Statements of the Government of New Zealand for the Year Ended 30 June 2025.
[1]This link leads to information not covered by the audit opinion on page: