IRD’s Increased Compliance Efforts: The Numbers Don’t Lie

It is becoming increasingly clear that Inland Revenue is continuing to amp up its tax compliance work and the numbers show just how serious they are!  In fact, from July to December 2024, Inland Revenue opened 3,600 audits – a 50% increase on the same period in the previous year.  With a strengthened allocation for compliance as part of Budget 2024 and advanced data capabilities, Inland Revenue’s actions show it is committed to enforcing tax compliance and are focusing on businesses and individuals who may be deliberately or inadvertently avoiding their tax obligations.  Some key figures from their efforts are as follows:

• $600 million in additional tax uncovered through audits – with half of that being uncovered from large enterprises in fewer than 10 audits.

• $859 million added to tax revenue through advanced screening, audits and voluntary disclosures.

• $2.7 million in unreported income from cryptocurrency transactions – with 160 warning letters sent out to encourage compliance.

• $111.6 million collected from student loan repayments from July to December 2024, with a noticeable rise in payments from overseas-based borrowers.

• 164 company liquidations between September and December 2024 – an 84% increase compared to 2023.

In the debt collection space, Inland Revenue have also contacted 200 business owners with multiple properties (in company name, trusts and personally) urging them to refinance their tax debts – making it clear if they don’t, Inland Revenue’s approach to the debt will escalate.  Furthermore, by combining their data with that from Trusts and the Companies Office, Inland Revenue identified 800 people potentially trying to avoid the top 39% tax rate by incorrectly keeping income in companies or trusts, and has reached out to them to “please explain”.

Tony Morris, Inland Revenue’s Segment Lead for Significant Enterprises, has advised that Inland Revenue has started gathering data from payment service providers to investigate businesses because “the payments data shows they are selling goods or services, but we're not receiving GST returns. Or because the number of sales indicates they should be GST registered, and they are not. Or because we can see big value sales, but they simply aren't on our records at all”.  IRD has also opened audit cases for $2.3 million of discrepancies in the construction sector and conducted 320 unannounced visits to independent liquor stores and 450 vape stores.

If you or your business have tax debt or have concerns about tax compliance, it is crucial to seek expert advice to address this sooner rather than later.  Don’t wait until it’s too late - contact us for advice on your options and assistance to correct any mistakes (and mitigate penalties and interest where applicable).  Taking action early can prevent more severe outcomes and ensure your compliance with New Zealand’s tax laws.

This article is intended for informational purposes only and should not replace specific tax advice.  For personalised advice on all tax matters please contact us.

This article was accurate at the time of publishing.