Bogus Expense Claims: Inland Revenue Warns Taxpayers of Serious Consequences
Inland Revenue has issued a strong warning to New Zealand taxpayers following the discovery of a coordinated scheme involving bogus expense claims and fraudulent amended tax returns.
The investigation highlights an important message for individuals and businesses: a tax deduction must be genuine, supportable and connected to the income-earning activity it relates to. Trying to increase a refund by claiming expenses that were never incurred or are not deductible can have serious financial and legal consequences.
Nearly 3,000 fraudulent returns stopped
Inland Revenue says its specialist team identified unusual patterns in tax returns earlier this month. The subsequent investigation identified and stopped nearly 3,000 fraudulent amended returns, including more than 500 submitted in a single night.
Before additional measures were introduced, $151,787 in refunds had already been paid, while a further $4.015 million in bogus claims was stopped. Inland Revenue is now taking steps to recover money that was incorrectly paid.
The department says the activity initially appeared to be concentrated in the transport industry but has since spread to other sectors and locations around New Zealand. Some taxpayers reportedly said they had heard about people offering assistance with expense claims through social media and workplace or community networks.
What happens if you make a false expense claim?
Claiming an expense simply because someone says it will increase your tax refund is extremely risky.
Inland Revenue has stated that people who claim expenses that are not legitimate could face:
Repayment of incorrectly received refunds
A shortfall penalty of up to 150% for evasion
Prosecution and criminal consequences
The consequences can extend well beyond losing the refund you received. Inland Revenue has also made it clear that it is actively identifying people who may be promoting or running fraudulent schemes.
Recent enforcement action demonstrates that tax fraud is taken seriously. In June 2026, an Auckland man was sentenced to 11 months' imprisonment after attempting to obtain GST refunds he was not entitled to, including submitting false information and documents.
Not every tax mistake is fraud
It is important to distinguish between an honest mistake and deliberately making a false claim.
Taxpayers can make genuine errors when completing a return. Inland Revenue provides processes for correcting mistakes, including certain amendments through myIR or corrections in a subsequent return, depending on the circumstances.
However, deliberately adding expenses that were not incurred, inflating legitimate expenses or claiming private costs as deductible expenses is very different.
If you discover that you have made an incorrect claim, it is better to address the issue promptly rather than ignore it.
What expenses can you legitimately claim?
The answer depends on your circumstances, income source and the type of expense.
For businesses, an expense generally needs to have a genuine connection with earning business income and be supported by appropriate records. Some expenses may also have private or business components, meaning only the appropriate business portion can be claimed.
Depending on the situation, supporting records can include:
Invoices and receipts
Bank statements
Business records
Mileage or vehicle records
Relevant agreements or documentation
Other evidence demonstrating the nature and purpose of the expense
Inland Revenue has previously highlighted the importance of supporting records when reviewing expense claims, including bank statements, invoices and logbooks where relevant.
Be careful with tax advice on social media
The latest case is also a reminder to be cautious about tax advice shared through Facebook groups, TikTok, messaging platforms and other social media channels.
A claim that someone can "get you a bigger refund" does not mean the claim is legitimate.
Your tax position is specific to your circumstances. Advice that may apply to one taxpayer may not apply to another, and following instructions to enter unsupported figures into your tax return could ultimately leave you responsible for the information submitted.
What should you do if you are unsure?
If you are uncertain whether an expense can be claimed, don't guess.
Speak with a qualified tax professional before filing or amending your return. If you have already submitted a return and believe you may have claimed something incorrectly, seek advice about the appropriate way to correct it.
At Tax Professionals, we help individuals and businesses understand their tax obligations, maintain appropriate records and make legitimate claims with confidence.
The goal isn't simply to maximise your refund — it's to get your tax position right.
Need help with your tax return?
Contact Tax Professionals for professional tax and accounting advice.