Extra funding to support more compliance work

Inland Revenue (IR) has outlined how it will use increased funding in this year’s budget to boost collection activities and invest more in tax compliance.

Additional funding

The Commissioner of Inland Revenue, Peter Mersi, says increased funding in this year’s budget means the great majority of New Zealand taxpayers who meet their obligations can continue to be confident IR will find those who aren’t.

“Budget 2025 also provides new additional permanent funding of $35 million per year for Inland Revenue to invest more in tax compliance and collection activities. 

“Along with the $29 million per year that was allocated in Budget 24, this is a significant funding boost and is recognition of what we do and the excellent results we’ve had so far this year,” Peter Mersi says. 

“In addition, the Government has agreed to continue $26.5m of funding that was set to end this year, and importantly, made it on-going. This means we can continue with a range of compliance and debt work, including around the Small Business Cashflow Scheme loans which are in default.” 

Return on Investment

Peter Mersi says “just like last year, IR is expected to return an additional $4 for every dollar invested in year 1, and $8 dollars from year 2. This is in addition to increasing the return from last year’s compliance funding boost by $8 from 1 July.

“While we do that, IR also must maintain its base level of tax collection and debt reduction."

Plans for the funding

Inland Revenue will use the additional funding to focus on new activities around things like:

• further increasing audits and debt collection in areas of high risk and/or value
• investigations into specific sectors such as property, organised crime, the hidden economy and trusts
• improved use of data and intelligence to more quickly identify and target discrepancies and pursue debt
• shifting from a manual to an automated process to collect data from third parties, such as banks. 
• investigating more targeted compliance activity measures.

Inland Revenue will take on additional staff to deliver this work, as well as using our systems and technology in more effective ways.

Third quarter result highlights

• This year to 31 March 2025, we have assessed additional tax of $880.8 million from audit activity
• The total number of IR-initiated liquidations this quarter (134) is 67.5% higher than the same quarter last year.
• Our debt collection activities continue to result in increased cash collection, with $2,985 million collected in the year to date compared to $2,688 million for the same period last year.
• The number of prosecutions initiated during this quarter has more than doubled. 
• Overseas-based student loan repayments increased by 43.9% compared to the same period last year.
• Child support debt (as at 31 March 2025) is $930 million, 10% lower when compared to the same period last year.