IRD Cracks Down on Construction Sector
Inland Revenue is tightening the screws on New Zealand’s construction industry. A year after issuing its so-called “last chance warning” to businesses behind on their tax obligations, the IRD has stepped up enforcement — and the numbers tell a clear story.
According to a recent statement from IRD spokesperson Gay Cavill, 56 audits completed since July have led to $6.6 million in additional taxes assessed, with a further 127 audits currently underway. This targeted compliance campaign is part of the department’s continued effort to improve tax compliance within the sector, and it’s gaining momentum.
The Construction Industry Under the Microscope
Construction companies have long faced unique cash flow challenges, often juggling multiple jobs, subcontractors, and staggered payment schedules. While understandable, these pressures don’t excuse non-compliance — especially when it comes to filing returns and paying taxes. IRD is taking this seriously and has made the construction sector one of its key focus areas.
As part of the 2025 “Tax Toolbox” campaign, 33,574 customers in the construction sector have already been contacted directly by the IRD. This follows the 38,380 contacts made during the 2024 campaign. This year, IRD is doubling down through targeted outreach via social media, digital ads, radio, and outdoor advertising.
A Sector Under Financial Strain
The IRD's compliance drive comes at a time when the construction industry is facing significant financial strain. Data from credit agency Centrix shows that 730 construction companies went into liquidation in the year to March — accounting for 31% of all business liquidations. That figure marks a 48% year-on-year increase, with 175 liquidations across all sectors recorded in April 2025 alone.
Many of these businesses are in residential building, followed by operators in property management, hospitality, and transport. For example, several companies in South Canterbury were placed into liquidation in early 2025, including a well-known kitchen business under investigation for potential insolvent trading.
Time to Get Ahead — Before the IRD Gets to You
It’s clear the IRD is no longer tolerating delays in tax compliance. In fact, back in December, 9,274 construction sector businesses were offered the opportunity to make payments or arrange instalment plans. The result? $38.8 million was paid through lump sums, with another $50 million under agreed payment terms.
While these figures show some level of compliance, the IRD is still actively pursuing those who haven’t engaged. Between January and May, 205 companies across all sectors faced formal enforcement actions — including winding-up proceedings.
What You Should Do Now
If you operate in the construction sector, this is your call to action:
Check your tax return filing status
Make sure your GST and PAYE are up to date
Set up a payment plan if you’re in arrears
Seek professional advice if you’re unsure where you stand
At Tax Professionals, we work with construction businesses across NZ to help them get back on track with their tax obligations — before things spiral out of control.
📞 Contact us on 09 625 0035 or visit www.taxprofessionals.co.nz to book a consultation today. Don’t wait until it’s too late.