Inland Revenue's Crackdown – Is Your Business Ready for the New Wave of Tax Audits?
The Inland Revenue Department (IRD) is stepping up its game — and New Zealand businesses need to be prepared. Following the latest government Budget announcement, Inland Revenue has received an additional $64 million in funding to intensify its enforcement and compliance activities. This injection of funds signals a new era of scrutiny, and businesses can no longer afford to treat compliance as an afterthought.
A New Approach to Tax Enforcement
According to EY tax leader Dean Madsen, this isn’t just about checking whether tax returns are filed correctly. IRD is now expected to delve deeper into how businesses arrive at their tax positions, demanding more detailed documentation, supporting data, and proof of governance.
This enhanced level of scrutiny will see IRD focusing on more than just general businesses. The property sector, trusts, the hidden economy (including cash-based businesses), and even areas tied to organised crime are now firmly in their crosshairs. It’s a significant shift from reactive auditing to proactive investigation and enforcement — with IRD expected to recover as much as $8 for every $1 invested in this initiative.
Why This Matters to Your Business
This development is more than a headline — it’s a warning. Every New Zealand business, from sole traders to established companies, must now ensure that their accounting systems, tax structuring, and financial records are robust and compliant with current IRD expectations.
Key risks businesses face under this new wave of enforcement include:
Inadequate recordkeeping: If your business cannot show clear documentation on how tax figures were calculated, you could be in trouble.
Outdated tax structuring: Business structures must align with current tax law and IRD's view of acceptable practice.
Failure to audit past years: IRD may review previous tax years and assess additional taxes, penalties, and interest.
Lack of professional advice: Without ongoing expert guidance, you risk noncompliance through errors or unawareness of changing rules.
What You Should Do Now
The best defence against a compliance issue is proactive preparation. Here are some steps you can take immediately:
Review your tax structure – Ensure it meets IRD’s current expectations.
Conduct a compliance audit – Go through past returns and supporting documentation to ensure accuracy.
Upgrade your systems – Implement accounting software that tracks income, expenses, and tax obligations accurately.
Strengthen governance – Have clear internal controls and processes to maintain the integrity of your financial data.
Work with professionals – Partner with experienced tax advisors to help navigate complex regulations.
Let Tax Professionals Help
At Tax Professionals, we help businesses stay compliant and audit-ready. Whether you need a full tax review, advice on structuring, or help with documentation, we offer personalised support to ensure your business is protected from penalties and reputational harm.
📞 Call us on 09 625 0035 or visit www.taxprofessionals.co.nz to book a free consultation.
Don’t wait until IRD calls — prepare now and stay ahead.