Working within a challenging economic environment, Inland Revenue has made excellent progress during the last year, delivering our core business of collecting and distributing money and implementing the Government’s Tax and Social Policy Work Programme.
Overall revenue has remained relatively flat, reflecting the broader economic conditions over the past year. Despite this challenging environment, I’m proud of the work the staff at Inland Revenue have done to improve compliance and deliver on the new initiatives as part of the 2024 and 2025 Budgets.
Our enterprise strategy drives our direction and is supported by working across our 3 broad strategic roles of being effective and efficient, taking active stewardship and making a broader contribution. This gives us a strong foundation for all of our work and underpins the results we’re achieving.
Making tax easier and simpler
Following the completion of our business transformation in 2022, which focused on making tax and social policy entitlements simpler and more certain, we have been building on the strong technology foundations, new systems and processes and our people’s capabilities to create an improved tax and social policy system.
Transformation enabled us to automate many processes and collect a significant portion of tax with minimal effort for our customers and us. This has resulted in almost halving the cost to collect $100 of tax since 2015.
The overall cost to comply for small-to-medium-sized enterprises is still higher than we want and new work is underway to help reduce their compliance costs, enhance their compliance and improve our own efficiency.
Throughout the year, we delivered a wide range of Government priorities including implementing personal income tax changes and the FamilyBoost scheme, which helps eligible households pay for the cost of early childhood education. We were able to introduce these changes quickly as a result of the systems developed through transformation.
As stewards of the tax system, it’s important we invest in long-term thinking. It’s always good to see where this work contributes to the development of new policy, such as the recently introduced Investment Boost scheme, where businesses can accelerate depreciation deductions for new assets acquired from 22 May 2025. This policy was heavily informed by our long-term insight briefing released in 2022.
Greater focus on compliance
Investment in our compliance activities has led to a significant increase in our audit and enforcement activity. Through focusing interventions on high-risk sectors including property non-compliance, trusts, organised crime and the hidden economy, and making new uses of data and insights to better target interventions, we are seeing really positive results, as outlined in this report.
Meeting challenges and maximising opportunities
The year has not been without challenges. Overdue tax and entitlements debt is a significant issue that becomes more challenging during tough economic times. Nevertheless, addressing this is a priority for both the Government and Inland Revenue.
We have recognised that we need to do more and have introduced an organisation-wide approach to debt, ensuring where possible we work with people to become compliant sooner, so that debt does not become unmanageable. We’re also being more proactive and data-driven to make sure our resources are focused on the areas of best returns.
We have renewed our focus on increasing repayments from overseas-based student loan borrowers, a group with historically low repayment rates. This focus has led to a much higher amount collected from these customers this year.
The Government’s focus on reducing public sector costs meant that Inland Revenue, alongside other Public Service agencies, was required to deliver baseline savings and self-fund some policy initiatives, alongside managing cost pressures. We’ve delivered efficiencies and sustainable operating cost-savings and looked for more innovative ways to deliver our work and improve service delivery. We also developed our first performance plan, setting out how we will achieve a sustainable fiscal position for 2024–25 and beyond.
We recognise the importance of keeping pace as the world changes around us and things like technology and in particular, artificial intelligence (AI), evolve. I’m excited about the work we’re doing to understand the opportunities these digital tools provide to be more effective and efficient, while ensuring its safe and responsible use and that New Zealanders trust we’ll do the right thing.
Satisfaction and trust in our services
Trust in what we do is essential for the integrity of the tax system. I’m encouraged to see that in the past year trust has continued to grow. More than 80% of our customers know that when people do the wrong thing, we will follow up. This is a positive reflection of our increased enforcement activity and the investment we have made in our people being able to do their work in the best ways. Customer satisfaction and ease in using our services also continue to move in a positive direction and this view is shared by tax agents, whose trust in Inland Revenue rose to its highest level ever this year.
Working together across the system
Inland Revenue is part of a connected Public Service as well as part of a tax and social policy eco system, within which we have a key role. We work with stakeholders across New Zealand and internationally. We have continued to work with others where we can contribute to improved government services or outcomes for our customers. This includes partnering with agencies such as the Ministry of Education to deliver FamilyBoost, progressing information-sharing agreements and being part of the multi-agency effort to combat organised crime.
I’m proud of the hard work our people do every day and that we have a strong culture which supports people to act with integrity. This was reflected in the results of the March 2025 Te Taunaki Public Service Census and shows our commitment to maintaining the fairness of the whole system, while also acting in respectful and empathetic ways.
Not only does this Annual Report reflect the work, innovation and effort that our people have put in across the department to deliver great results, it signposts the work we will continue to do as we implement the Tax and Social Policy Work Programme, address integrity risks to improve compliance and work to further simplify and digitise services.
This is how we’ll move closer to our aspiration of improving oranga for current and future generations, so that all New Zealanders can benefit from what we do.
Peter Mersi
Commissioner of Inland Revenue Te Tari Taake