Receivables include general taxes, Working for Families Tax Credits, COVID-19 debt (excluding the Small Business Cashflow Scheme), and any penalties and interest associated with these activities. These are non-contractual sovereign receivables. The interest and penalties charged on receivables are presented as revenue in the Schedule of Non-departmental Revenue. Receivables for child support, the Small Business Cashflow Scheme and student loans are reported separately in Notes 4, 5 and 6 respectively.
Receivables are initially recognised at face value as the fair value is not materially different from the face value. Receivables are subsequently tested for impairment at year end in accordance with PBE IPSAS 26 Impairment of Cash-Generating Assets.
Allowances for amounts that IR does not expect to recover are recognised when there is objective evidence that the asset is impaired. Impairments are included in the Schedule of Non-departmental Expenses. Impairment losses can be reversed where there is evidence that the impaired value of the asset has increased.
Gross value of receivables
The gross value of receivables at 30 June 2025 is $27.974 billion, a decrease of $512 million (1.8%) from 2023–24. The gross value of receivables includes both overdue receivables (debt) and accrued amounts which are not yet due.
This year, IR reviewed and updated the definition of overdue tax and entitlements debt. Previously debt was considered overdue when we began action to collect it or if it remained unpaid 25 days after the due date. Under the new definition, debt is considered overdue on the day after the due date.
The change in definition has resulted in higher reported overdue debt balances. If the previous definition had been applied at 30 June 2025, the reported overdue debt balance would have been $163 million lower.
Whilst this approach aligns the definition more closely with the point at which payment obligations become outstanding and provides a more timely view of overdue debt for reporting purposes, it also results in greater volatility in the overdue debt balance between years, depending on the timing of due dates and weekends. For example, if the GST due date of 28 June falls on a Saturday, the due date moves to Monday 30 June, meaning the debt is not considered overdue until 1 July and is therefore not included in overdue debt at 30 June.
Overdue debt now includes all assessed debt which has passed its due date, as well as unpaid provisional tax where the final tax payment due date has passed.
Overdue debt has increased in 2024–25 by $1.315 billion (16.5%) to $9.290 billion. Excluding the definitional change, the increase is $1.152 billion (14.5%). This growth is less than in 2023–24, when overdue debt increased by $1.287 billion (22.1%) excluding reclassification adjustments.
Growth in overdue debt for all tax types has continued. Ongoing domestic downturn and global economic uncertainty are continuing to cause significant strain on businesses. As a result, many businesses are not up to date with their tax payments, and we have seen an increase in customers setting up repayment plans to manage their tax debt.
Not due receivables have decreased by $1.827 billion (8.9%). The 30 June 2024 not due receivable balance was unusually high, inflated by $2.144 billion due to the timing of the Matariki public holiday. This moved the payment due date for GST (period ending 31 May 2024) and provisional tax from 28 June 2024 to 1 July 2024.
In addition, $163 million of the 2024–25 movement reflects the reclassification of debt from not due to overdue as a result of the revised definition of overdue debt.
Recoverable amount of receivables
At the end of the year, receivables are valued by an independent external valuer using predictive models. We provide data to the valuer on receivable balances and repayments. The data is up to 30 June 2025.
To calculate the impairment of receivables, assumptions are applied to estimate future repayment behaviour, as well as economic factors such as discount rates. The key assumptions are explained below:
- The recoverable amount of receivables is calculated by forecasting the expected repayments using a weighted average of previous years’ repayments, deducting an estimate of collection costs and then discounting using an appropriate rate. If the recoverable amount of the portfolio is less than the carrying amount, the carrying amount is reduced to the recoverable amount. Alternatively, if the recoverable amount is more, the carrying amount is increased.
- Tax pooling funds held in the Crown bank accounts have been netted off against receivables. These funds have been deposited by commercial intermediaries and allow customers to pool tax payments to reduce their exposure to use-of-money interest. Underpayments and overpayments are offset within the same pool.
- This year, the dataset provided to the valuer separately identifies provisional tax amounts. This has enabled the valuer to more accurately model and value the relationship between provisional tax and the final income tax liability that crystallises when the income tax return is filed. Previously, provisional tax amounts which were past their instalment due dates, but not yet past the final tax payment due date were valued separately from overdue debt.
The valuer has noted that it is not possible to fully assess the implications of global economic uncertainty on the recoverable amount of the balances or the economy as a whole (both in terms of length and the degree of impact). The uncertain and volatile nature of future debt repayments means that there may be significant uncertainty in the estimated value of these receivables. The valuation reflects the increased levels of debt observed in the data up to 30 June 2025. Future repayments of debt will be dependent on the economic conditions our customers face and on the impact of our compliance activities and relief mechanisms such as repayment plans.
Write-offs for the year totalled $805 million. This compares to $890 million in the prior year, which included $695 million of write-offs and $195 million of COVID-19 remissions. COVID-19 remissions ceased in April 2024.
Overall, the impairment of debt and debt write-offs totalled $1.872 billion for the year ended 30 June 2025 (2023–24: $2.376 billion). The recoverable amount of receivables at 30 June 2025 is $21.409 billion, a decrease of $1.580 billion (6.9%) from 30 June 2024.
| Receivables | Actual 2024 ($000) | Actual 2025 ($000) |
|---|---|---|
| Receivables |
||
| Gross receivables | $28,485,397 | $27,973,584 |
| Impairment | $(5,497,021) | $(6,564,738) |
| Recoverable amount of receivables | $22,988,376 | $21,408,846 |
| Current and non-current apportionment |
||
| Receivables–current | $22,045,776 | $19,583,346 |
| Receivables–non-current | $942,600 | $1,825,500 |
| Recoverable amount of receivables | $22,988,376 | $21,408,846 |
| Ageing profile of gross receivables |
||
| Not due1 | $20,510,982 | $18,683,744 |
| Overdue2 |
||
| Less than 6 months | $1,886,308 | $1,663,895 |
| 6 to 12 months | $873,641 | $870,438 |
| 1 to 2 years | $1,668,453 | $2,001,322 |
| Greater than 2 years | $3,546,013 | $4,754,185 |
| Total overdue | $7,974,415 | $9,289,840 |
| Total gross receivables | $28,485,397 | $27,973,584 |
| % Overdue | 28% | 33% |
| Receivables–impairment |
||
| Opening balance | $4,011,065 | $5,497,021 |
| Impairment losses recognised | $2,375,843 | $1,872,426 |
| Amounts written off as uncollectable | $(889,887) | $(804,709) |
| Closing balance | $5,497,021 | $6,564,738 |
[1] Not due receivables comprise estimations or assessments for tax where the tax has been earned, but is not yet due to be paid, and returns that have been filed before the due date. It also comprises social policy receivables not yet due to be paid.
[2] Receivables are classified as overdue when they are not received from customers by their due date. Due dates will vary, depending on the type of revenue owing (for example, income tax, GST or KiwiSaver) and the customer’s balance date. Overdue debt includes debts collected under instalment, debts under dispute, default assessments, debts of customers who are bankrupt, in receivership or in liquidation and overdue provisional tax instalments where the final tax payment date has passed. IR has debt management policies and procedures in place to actively manage the collection of overdue debt.
Overdue debt
| Actual 2024 ($000) | Actual 2025 ($000) | |
|---|---|---|
| Tax debt | ||
| GST | $2,836,207 | $3,259,817 |
| Income tax | $3,144,080 | $3,508,177 |
| Employment activities | $1,514,498 | $2,027,639 |
| Other | $175,687 | $171,355 |
| Total tax debt | $7,670,472 | $8,966,988 |
| Tax credits and entitlements | ||
| Working for Families Tax Credits | $273,454 | $295,167 |
| COVID-19–Resurgence Support Payment and COVID-19 Support Payment | $30,489 | $27,685 |
| Total tax credits and entitlements debt | $303,943 | $322,852 |
| Total overdue debt | $7,974,415 | $9,289,840 |
The significant assumptions and sensitivities, underpinning the valuation of receivables, are shown below:
| Estimates and assumptions | Actual 2024 | Actual 2025 |
|---|---|---|
| Assumptions |
||
| Use-of-money interest rate | 10.91% | 9.89% |
| Discount rate | 5.50% | 4.00% |
| Sensitivities ($000) |
||
| Impact on the recoverable amount of a 2% increase in the discount rate | $(44,000) | $(99,000) |
| Impact on the recoverable amount of a 2% decrease in the discount rate | $47,000 | $107,000 |
Credit risk
Credit risk is the risk that a third party will default on its obligation, causing a loss to be incurred.
Under the Tax Administration Act 1994, IR has broad powers to ensure that people meet their obligations. Part 10 of the Act sets out the powers of the Commissioner to recover unpaid tax.
The Crown does not hold any collateral or any other credit enhancements over receivables that are overdue.
Receivables are widely dispersed over a number of customers and, as a result, the Crown does not have any material individual concentrations of credit risk.