IRD’s tougher stance on debt recovery is reaping record returns – and forcing many ordinary New Zealanders to finally pay up, writes Catherine McGregor in today’s extract from The Bulletin.
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IRD compliance crackdown pays off
Inland Revenue’s increasingly assertive debt recovery campaign is continuing to pay off handsomely, with its latest annual report showing nearly $12 returned for every dollar spent chasing overdue tax, even better than 2024’s $9.50 per dollar result. The momentum is largely due to successive funding boosts for IRD’s compliance operations, allowing them to target high-risk sectors such as property, trusts, organised crime and the “hidden economy” – areas like construction where cash jobs and under-reporting of income are rife. Having pledged to go “full throttle” in 2025, Inland Revenue says the bulk of its audit work remains focused on business tax evasion, but individuals who owe back taxes are increasingly being caught up in its reach.
Money taken directly from bank accounts
For thousands of taxpayers, that reach means IRD literally withdrawing funds from their bank accounts. RNZ’s Susan Edmonds reports that since mid-June, 16,500 notices of planned deductions have been sent to account holders, 25% more than in all of last year. Chartered accountant John Cuthbertson said the “softly, softly” approach during Covid had allowed tax debt to swell to $9.3 billion, and now IRD is focused on getting it paid down. According to Cuthbertson, some of the debt is quite old and the department is moving fast to access it before it becomes non-collectible.
While IRD says it informs people before money is taken, some accountants say their clients received just a week’s warning. Other debtors told Edmonds they had no notifications at all. One woman said the department began withdrawing $1000 a week from her account to recover long-standing child support debt – a sum she called “unfeasible.” The department said it considers each case individually, but confirmed the recent funding injection had allowed it to increase compliance activity, including bank account deductions.
Crypto investors in the spotlight
Another newer target is New Zealand’s growing pool of cryptocurrency investors. Inland Revenue’s latest report shows it is scrutinising 150 traders for “tens of millions” in unpaid tax, after data from local exchanges revealed New Zealanders had traded $7.2 billion worth of crypto assets over the past tax year. The top 1.5% of traders, responsible for nearly 80% of that value, have been contacted to explain missing tax declarations, Newsroom’s Andrew Bevin reports.
Tim Doyle, a specialist crypto accountant, says the crackdown has accelerated alongside Bitcoin’s record-high prices: “Inland Revenue is now seeing this as easy pickings and going after those people.” Incidentally, Doyle says his two biggest clients have left New Zealand, resettling in Dubai and Thailand, both of which “have very friendly crypto tax policies”. While IRD’s investigatory powers are currently limited, a new OECD data-sharing agreement will give it far greater powers to look into offshore crypto transactions from next year.
Minister questions overstayer access to IRD numbers
Away from tax recovery, Inland Revenue has found itself drawn into an immigration debate after revenue minister Simon Watts sought advice on stripping IRD numbers from visa overstayers and people working illegally, according to an OIA disclosure to Newsroom’s Marc Daalder. Officials told Watts illegal migrants are currently included in the tax base to preserve system integrity, and that the department has no legal access to Immigration NZ’s visa data. While an information-sharing agreement with MBIE is being drafted, it does not yet cover Immigration NZ, and expanding it would require privacy consultation and public input.
Greens immigration spokesperson Ricardo Menéndez March said the revelation showed the need for an overstayer amnesty, “as opposed to taking a leaf from the Trump administration’s book and pushing overstayers into far more precarious and exploitative conditions.”
