Why Inland Revenue is Taking Money Directly from Bank Accounts
In recent months, thousands of New Zealanders have noticed unexpected deductions from their bank accounts — not from scammers, but from Inland Revenue (IR) itself. This isn’t a mistake. It’s part of IR’s intensified effort to recover billions in overdue tax, and the department has made it clear: the era of leniency is over.
A Sharp Increase in Bank Deductions
According to IR spokesperson Rowan McArthur, the department has issued 16,500 notices of planned bank deductions since mid-June — a staggering 25% more than the entire previous year. This reflects a major shift in enforcement strategy.
IR is now targeting taxpayers who:
Have repeatedly failed to engage or respond
Have not agreed to payment plans
Appear to have sufficient funds in their bank accounts
Continue to accumulate tax debt without communication
Between mid-June and 30 September alone, IR completed 8,181 deductions, recovering $17 million, with another 6,026 deductions underway, collecting $5.5 million more.
Why IR Is Cracking Down Now
Tax debt across New Zealand has ballooned. As of March, overdue tax had blown out to $9.3 billion. John Cuthbertson, Tax Leader at Chartered Accountants ANZ, explains that the “softly, softly” approach during the Covid years allowed taxpayers leniency — but now the backlog is catching up.
“Tax debt… is a significant amount of money,” he says. “Funding in Budget 2024 and 2025 was allocated specifically for IRD to be more aggressive… debt is the focus and they certainly don’t want it getting any larger.”
Some of this tax debt is very old. IR is now racing to recover what it can before it becomes legally non-collectible.
Not Just Bank Accounts — IR Has More Tools
While bank deductions are the most visible enforcement method, IR has several other powers, including:
Deductions directly from wages or salary
Third-party debt collectors
Arrest warrants for persistent non-compliance
Seizure of assets in rare cases
Some accountants report that IR has tightened its systems dramatically. With upgraded technology and access to more data sources, the department can now detect overdue tax faster and identify taxpayers with available funds.
What’s Causing the Shock?
Many taxpayers say it feels sudden, but IR’s guidance indicates that people would typically receive:
A notice of overdue amounts
A reminder or warning letter
A final notice before deduction
However, some businesses claim the notice period feels short — sometimes as little as a week — making it difficult to manage cash flow if they are already struggling.
What You Should Do If You’re at Risk
The most important action is engage early. IR has publicly stated it prefers working with taxpayers to arrange:
Instalment plans
Temporary relief
Debt management solutions
Ignoring IR is the fastest way to trigger deductions or stronger enforcement.
Tax experts warn that using IR “as a bank” by delaying GST or PAYE payments is extremely risky. These taxes are held in trust for the Crown — failing to pay them is taken very seriously.
Final Word
The message from IR is clear: engage early, communicate openly, and don’t wait for deductions to happen. If you’re behind on tax or worried about future obligations, talk to a tax professional before IR takes action for you.