This year’s Inland Revenue (IR) Annual Report highlights the department’s compliance efforts, delivering $1.4 billion of revenue this year; far exceeding targets and showing a return of $11.81 for every dollar spent.
The report says the return on investment (ROI) compares with $9.50 for the 2023-24 year. The target for this year was $10.
“In Budget 2025, we were allocated an additional $35 million in permanent annual funding for compliance and collection activities. We were also allocated $26.5 million to continue activities that had been supported by time-limited funding due to end in June 2025.
“And we are seeing positive results from focusing 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 our efforts.
“These results mean fairer outcomes for taxpayers and stronger confidence in the tax system. Our focus will continue to expand into high-risk sectors to protect honest businesses and ensures everyone pays their share.”
A snapshot of this year’s compliance activities:
• 17,940 visits to business premises and worksites
• 7,641 audits opened - 49% more than last year.
• 6,147 audits closed - 42% more than last year.
• 28,530 voluntary disclosures by customers, 1% more than last year.
• 17 arrest warrants issued, 42% more than last year.
• 80 warrants to access premises, 63% more than last year.
• 50 prosecutions initiated, 32% more than last year.
• 30 prosecutions completed, 1 less than last year.
• 88,367 S157 deduction notices for overdue debt were issued, 19% more than last year.
Revenue collected for the 2024 year as a result of this activity
• Revenue through compliance interventions: $1.4bn vs target of $1.038bn
• Cash collected from overdue debt activities: $4.3bn vs target of $4.080bn
• Overseas based student loan repayments: $243m vs target of $189m
Changing approach to managing tax debt
The report says a changing approach to debt management has been another feature of IR’s work this year.
While New Zealand’s ratio of tax debt to tax revenue (currently sitting at 7.7%) compares favourably with other countries, it’s getting worse because of the growth of tax debt, it says.
“We recognise that continuing to do the same things won’t significantly reduce debt and write-offs. We’re taking an organisation-wide approach and, based on what our data tells us, ensuring resources are focused on areas that will get the best returns. So…
“Our preference is to keep working with people in debt to return them to being compliant taxpayers. We’ll let customers know about the help available, treat people with respect and manage debt in a fair and transparent way.
“We’ll make more use of our tools to support staff doing debt collection work.
“We’ll keep evolving our analytics capabilities and develop new interventions to shift customer behaviour.
“We won’t retreat from making hard decisions to secure overdue payments and liquidations will continue to be our option of last resort.”
Overseas student loan borrowers
The report says Inland Revenue has renewed its 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.
There was $243m of overseas based student loan borrower repayments made, exceeding our target for the year by 28% (target was $189m).
Small Business Cashflow loans due
The report says that five years after the introduction of the Small Business Cashflow Scheme (SBCS), loans began to mature in May 2025.
More than 129,000 businesses were issued loans totalling $2.4 billion.
While a total of $1.6 billion in loans has been repaid, around 27,000 businesses were in default or had missed their repayments as at 30 June 2025.
“We continue to support customers who have missed or defaulted payments to help them get back on track. For example, approximately $10 million in SBCS and other tax debt has been recovered in a recent campaign targeting those customers.
Making tax easier and simpler
The impact of Inland Revenue’s technology and organisation transformation has continued to have an impact on making tax easier for customers to pay and quicker for Inland Revenue to process.
94.5% of GST, employer deductions and income tax was paid on time and in full ($110.5b), compared to 94.3% in 2023.
99.3% of income tax, GST and employment information returns were filed digitally, compared to 99.2% in 2024.
And processing times continue to be impressive, for example:
• 92% of tax refunds were issued within five weeks compared to 86.6% last year
• 97.7% of GST refunds issued within four weeks compared to 97.1 last year
• 91.7% of FamilyBoost claims were processed within 10 working days