Government Investment Fuels Enforcement
Record Returns & Rising Audits
New Zealand’s Inland Revenue Department (IRD) is delivering unprecedented results from its compliance and enforcement efforts, reshaping the tax landscape for businesses and individuals alike. The department’s 2025 Annual Report reveals a record-breaking $1.4 billion in revenue from compliance activities, achieving a return of $11.81 for every dollar spent, well above the $10 target and up from $9.50 the previous year.
Budget 2025 allocated $35 million in permanent annual funding for compliance and collection activities, plus $26.5 million to extend time-limited funding. This has enabled IRD to expand its reach, particularly in high-risk sectors including property non-compliance, Trusts, organised crime and the hidden economy.
IRD’s use of data analytics and machine learning has significantly improved its ability to detect discrepancies and target enforcement efforts. It’s increasingly a matter of when - not if your business will face a risk review or audit.
The scale of IRD’s compliance operations is striking:
These efforts yielded $1.4 billion in compliance revenue, $4.3 billion in overdue debt collections, and $243 million in overseas student loan repayments, exceeding all targets.
CG Comment: Over the last year, we’ve seen a notable increase in IRD reviews, particularly concerning GST returns where there is a significant refund. While some reviews are resolved quickly, others have involved extended communication with IRD, across multiple return periods, and required specialist legal advice.
Importantly, an IRD review does not imply wrongdoing. To date, all reviews we’ve been involved in have concluded with no further action by IRD, and refunds have been released.
However, these reviews can lead to significant accounting and legal costs. We offer Audit Shield through our Accountancy Insurance Master Policy, which covers these professional fees. Our clients with this cover have successfully claimed related costs.
If you’re not currently covered by Audit Shield and would like more information, please contact our office to discuss the details and pricing.