Inland Revenue (IR) will intensify its tax compliance and collection efforts following a significant funding boost in Budget 2025, with expectations of strong returns on investment.
The Government had allocated new additional permanent funding of $35 million a year for Inland Revenue and also continued funding of $26.5 million a year from Budget 2022 that was due to run out in June.
“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,” Inland Revenue commissioner Peter Mersi said.
Mersi said the increased funding meant the majority of taxpayers who met their obligations could continue to be confident IR would find those who were not.
He said IR was expected to return $4 for every dollar invested in the first year and $8 for every dollar from the second year.
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“This is in addition to increasing the return from last year’s compliance funding boost by $8 from July 1.
“While we do that, IR also must maintain its base level of tax collection and debt reduction.”
The increased funding would be invested into new activities, Mersi said.
These would include further increasing audits and debt collection in high risk/value areas, investigations into specific sectors such as property, organised crime, the hidden economy and trusts, as well as the improved use of data and intelligence to speed up the identification and targeting of discrepancies and pursuing debt.
The process of collecting data from third parties such as banks would shift to an automated process from a manual approach, while more targeted compliance activity measures would be investigated.
Additional staff would be hired for this work and systems and technology would be used in more effective ways, Mersi said.
Increase investment will ‘accelerate returns’ – Watts
On the increased funding in the Budget, Revenue Minister Simon Watts said hard-working Kiwis who paid their taxes were “being ripped off by tax cheats who deliberately evade their obligations”.
“New Zealand’s tax debt rose to $8.5 billion by the end of 2024. At a time when the Government is carefully managing every dollar to fund the essential frontline services Kiwis rely on, it’s essential we crack down on those who are not paying their share of tax.”
Watts said the increased investment would accelerate returns already being seen from the compliance funding in last year’s Budget.
“In the year to March 2025, Inland Revenue collected almost $3 billion of overdue debt and is on track to collect more than $4 billion by June 30.”
