Inland Revenue’s Tax Crackdown Paying Off — What It Means for NZ Businesses
Inland Revenue’s latest annual report reveals that its tougher stance on overdue tax is delivering major results — and it’s a clear message to New Zealand businesses: tax compliance is no longer optional.
In the 2024–2025 financial year, the IRD recovered almost $12 for every $1 spent on enforcement, a sharp increase from the $9.50 return achieved the previous year. That’s a significant jump in efficiency — and it’s being powered by data, stronger enforcement tools, and a renewed focus on high-risk sectors.
A Closer Look at IRD’s Crackdown
Over the past year, IRD has intensified its compliance activity across the board. Key figures from the report include:
88,367 deduction notices issued for overdue tax debt
17,940 business visits to review on-site compliance
7,641 audits opened
28,530 voluntary disclosures received
17 arrest warrants and 80 search warrants issued
50 prosecutions initiated and 30 completed
With over $10 billion in overdue tax estimated nationwide, the department is under clear pressure to bring that number down. These results show that enforcement is ramping up — and it’s paying off.
Bigger Budgets, Bigger Results
In Budget 2025, IRD was allocated an extra $35 million in permanent funding for compliance and collections, plus $26.5 million to continue previously time-limited initiatives. This investment is enabling IRD to expand its reach into sectors with high levels of non-compliance — including property transactions, trusts, organised crime, and the hidden economy.
By leveraging improved data analytics, IRD can now identify risk patterns faster, target audits more precisely, and act on overdue payments sooner. The focus, as the department puts it, is on “fairer outcomes for taxpayers and stronger confidence in the tax system.”
What It Means for Businesses
For most business owners, this crackdown highlights a few key takeaways:
Proactive compliance is now essential.
Businesses that delay GST, PAYE, or income tax payments are more likely than ever to face enforcement action.Data matching is getting smarter.
With digital filing, real-time bank reporting, and third-party data, it’s increasingly difficult for errors or omissions to go unnoticed.Voluntary disclosure pays off.
The IRD continues to reward transparency — those who come forward to correct errors before an audit begins often face lower penalties.Trusts and property investors are under the microscope.
Expect more reviews of inter-trust loans, undeclared rental income, and property “flipping” transactions.
The Right Approach
Interestingly, the IRD says it’s also changing its tone — balancing enforcement with a willingness to work constructively with taxpayers. “Our preference is to keep working with people in debt to return them to being compliant taxpayers,” the department notes.
That means businesses in arrears should act early — seek help, enter into payment arrangements, and get professional advice before issues escalate.
Final Thoughts
The message from Inland Revenue is clear: enforcement is tightening, technology is advancing, and compliance is non-negotiable. For businesses and trustees, this is the time to review tax positions, ensure accurate filings, and maintain full transparency.
At Tax Professionals, we assist clients in staying compliant — from tax debt negotiation and audit support to proactive tax planning and forecasting. If you’ve fallen behind or want to ensure your business is audit-ready, now is the time to act.
Talk to our team today about a compliance health check — because prevention is always cheaper than enforcement.