Disclosure of judgements

Reporting entity

Inland Revenue (IR) is a New Zealand government department as defined by section 5 of the Public Service Act 2020. The relevant legislation governing our operations includes the Public Finance Act 1989, Public Service Act 2020 and Public Accountability Act 1998. IR’s ultimate parent is the New Zealand Crown.

We are the steward of New Zealand’s tax system and the social policy system for the products we administer. This means we consider whether the products, and the system as a whole, are effective and efficient, work as intended, achieve the intended outcomes and are fit for purpose. We do not operate to make a financial return, and we are a Public Benefit Entity (PBE) for performance reporting purposes.

Performance results cover all our activities as set out in the 2024–25 Estimates of Appropriations for Vote Revenue. These are provided in the section ‘Year-end Performance Information on Vote Revenue Appropriations’. Results are also provided for other indicators from across our performance measurement framework (PMF) as outlined in our Statement of Intent 2024–2028. These are provided in the sections on ‘Progressing our Strategic Intentions’, ‘Implementing the Government’s Priorities’ and ‘Assessment of our Operations’. Results relate to the year ended 30 June 2025 unless otherwise stated. Performance results were authorised for issue by the Commissioner and Chief Executive of Inland Revenue on 30 September 2025.

Additional information, including on organisational health and capability, is not audited but provides additional context to our performance. 

We use performance information from our PMF to provide our organisation’s Enterprise Priorities and Performance Committee and other stakeholders with a regular update on performance areas at risk and to inform decision-making, planning and prioritisation.

Statement of compliance

Performance measure results and information have been prepared in accordance with Tier 1 PBE financial reporting standards, which have been applied consistently throughout the period, and they comply with PBE financial reporting standards.

We have made judgements on the application of reporting standards and estimates and assumptions concerning the future, discussed below. The estimates and assumptions may differ from the subsequent actual results.

Critical reporting judgements, estimates and assumptions

We use the performance measurement framework on the page linked below to help us achieve outcomes for New Zealand, contribute to Government priorities, improve outcomes for customers and deliver high-quality services. The measures included this year help assess our progress and results.

A tax and social policy system delivering for New Zealanders today and future generations

We review our performance measures each year. Performance measures are selected through consultation with subject matter experts with consideration of measures that best demonstrate performance against key functions and activities, availability of data and relevance to the result and outcome we are trying to achieve. Proposed changes are approved by our organisation’s Strategic and Investment Board—proposed changes to output measures, including targets are then approved by the Minister of Revenue. With the exception of policy advice measures, and some externally mandated indicators of organisational health and capability, we have discretion to select our measures and targets.

For comparability and consistency, we maintain a core set of performance measures throughout the PMF. This allows us to compare performance from prior years and to maintain visibility of critical performance areas over time.

IR sets annual targets for output and asset performance measures based on historical performance, with consideration of factors that may impact future performance and opportunities for improvement. Outcome and impact measures, which are focused on improvements over the medium to long term, are monitored for trend-over-time results.

The judgements that have the most significant impact on selection and measurement are disclosed below. There were no pervasive constraints on information that influenced our service performance information.

Output measures

Our output measures show how well we delivered our services. Our performance against our output measures and standards is set out on the page linked below. They reflect the information included in The Estimates of Appropriations for Vote Revenue. The 2024–25 results are audited. 

We have included comparisons against the results for 2023–24 where possible and included 2025–26 performance standards. This information is unaudited. We provide additional information to explain any significant changes in performance or where our standards have not been met. 

Note: reporting for the Science, Innovation and Technology: R&D Tax Incentive (M84) (A10) appropriation through an evaluation will be provided by the Ministry of Business, Innovation and Employment.

Judgements

Given the size, diversity and complexity of our functions and services, we have grouped our material judgements into 4 areas: customer experience, service delivery, compliance and organisational health and capability.

Customer experience

Customer surveys are an important tool to help IR understand experiences and perceptions. Surveying our customers is critical to supporting accountability reporting and identifying areas for improvement.

Survey performance measures provide information on the impact of our services on customers. We use them to understand whether services met customer expectations, contributing towards our broader outcomes. The PMF contains 9 customer survey-based measures from our Customer Experience and Perceptions (CXP) survey.

The CXP survey is an ongoing monitor that helps us measure trust, tax morale and customer experience over time. This continuous, online survey includes weekly random samples of the general public and those who have recently interacted with us.

Actual performance is measured from respondents’ ratings on a 7-point scale. Results represent those respondents who gave a score of 5 or more. In 2024–25, we received 2,510 responses from the general public, with an average survey response rate of 3.0%. We received a total of 4,088 responses from customers who had a recent interaction with IR, with an average survey response rate of 4.0%. The overall margin of error for the survey is +/-1.95%. The survey was run on behalf of IR by Verian.

Service delivery

We review service delivery measures each year to ensure key products or services are represented in our measures, and that they are balanced, meaningful to customers and reflect the operating environment. Measures focus on the quality, timeliness and cost of services. The targets set for them are a commitment to what we will deliver with the funding provided.

Quality

We monitor the quality of our rulings reports, adjudication reports and public items produced to ensure they meet the standards required. We evaluate these items through a review of a random sample of 25% of each report type. Reviews consider whether the contents of reports and items meet the applicable purpose, logic, alternatives, consultation and practicality standards. For instance, that templates include overt consideration of alternative arguments raised and consideration of consultation comments. Reviews are completed by senior staff who were not involved in processing the adjudication, ruling or public item.

Timeliness

Timeliness in responding to customers is an important part of our role to make it easy for customers to meet their tax obligations and receive their entitlements. Measures cover key activities such as customer registrations, processing returns and payments, answering customer queries, managing debt and unfiled returns and providing rulings and advice.

Cost

The cost-based measures in our PMF demonstrate the cost-effectiveness of our activities. We allocate costs to business services, appropriations and products. Cost allocations include 2 components:

• Direct allocations, where activities contribute directly to an appropriation or category and can be mapped directly to one or more business service. Direct costs are allocated based on judgements by business group representatives. We review direct allocation rates during the year to ensure that the existing allocations for an individual cost centre accurately reflect how cost centres expend effort.
• Indirect allocations, where cost centres do not contribute directly to an appropriation or category and cannot be linked directly to a business service. The allocation rule for these is based on the weighting of ‘direct allocations’ for the direct cost centres that the indirect cost centre is aligned to.

Compliance

Debt

Our overdue debt reporting has been based around when our debt collection activities commence. From 2025, we have changed our definition of ‘overdue’ to include all debt that is not paid by the day after the due date. This includes provisional tax payments where a return has not been filed and the income tax due date has passed. See our page on debt collection for more information.

$4.3 billion in overdue tax debt collected

We have aligned the methodology for the measures ‘percentage of collectable debt value over 2 years old’ and ‘percentage of tax debt value under an active repayment plan’ to the updated definition as they measure a subset of the overdue debt. The impact to both measures has not been material.

The methodologies for the measures ‘percentage of new customer debt resolved within 6 months’ and ‘cash collected for every debt dollar spent’ are based on when debt collection actions commence, reflecting the intent of the measure to monitor the effectiveness of our collection activities.

Other compliance

Results for the value from compliance activities included in the output measure ‘identified value from compliance activities over associated costs’ comes from 3 components: audits, integrity reviews and voluntary disclosures.

• An audit is an investigation of a customer's tax affairs based on initial risk analysis to determine the accuracy of the information provided. The reported value from the completed audit is the additional revenue assessed or disallowed expenditure following the corrections to the customers’ account that otherwise would not have been accounted for.
• Integrity reviews are carried out at the time of filing returns and forms that have been flagged for potential inaccuracies. The reported value reflects the revenue that would have been lost if incorrect or fraudulent refunds and tax reductions had not been intercepted during the filing process.
• A voluntary disclosure is when a customer tells us what is wrong with their tax return before we find out in some other way. This can include a request to amend their return, declare omitted income or incorrectly claimed expenses. The value reported relates to the difference between the original assessment and the corrected assessment.

Organisational health and capability

Organisational health and capability indicators provide information on how IR is using its resources to deliver for customers and government and ensure performance is sustainable. A number of indicators are externally mandated such as targets under the Carbon Neutral Government Programme and timeliness in paying invoices. Reporting on our Diversity, Equity and Inclusion Roadmap, and Māori Representation Roadmap, includes our actions and reporting relating to the Gender, Māori, Pacific and Ethnic pay gaps. This is provided on our website. 

Performance measure footnotes or additional information

IR includes footnotes or additional information for some performance measures. The criteria we apply to ensure disclosure of the most relevant and useful information are:

• the reason for not achieving a particular target
• the reason for achieving 15% above a target
• assessment criteria used such as the survey scale
• any change in measurement methodology from the previous year
• any correction to a previously reported result
• clarifying which products or services are included or not included in the result, or the date or timing to which the data relates
• an explanation of the measurement approach.

Changes to measures and targets

We review our performance measures and targets each year. We do this to make sure measures continue to be relevant, reflect the range of services we provide and changes in our operating environment and support the achievement of our outcomes.

We apply the standard PBE FRS 48 for Service Performance Reporting, with its principles-based requirements to ensure service performance information and reporting is appropriate and meaningful to users. Considerations include:

• maintaining consistency of reporting
• ensuring performance information is comparable, relevant, reliable, neutral, understandable and complete.

Changes to our output measures for 2024–25

The changes for 2024–25 strengthened our focus on key performance aspects. Key changes were 3 new measures that provide additional focus on effective and efficient revenue collection and greater transparency for how we manage customer contacts:

• Percentage of tax payments made on time by value (target 94%)
• Percentage of tax debt value under an active repayment plan (target ‘improving value over baseline’)
• Percentage of calls answered (target 70%).

Changes to our output measures for 2025–26

The changes for 2025–26 ensure the measures work together to deliver the results desired, provide greater transparency and incorporate updated tax debt definitions into the methodologies and targets where appropriate. Historical trends will be available for new or changed measures to ensure a longitudinal view of performance is available.

More detail on the key changes for 2025–26 is provided in the table below.