Heightened Tax Scrutiny: What the Latest Inland Revenue Compliance Data Means for You
Inland Revenue (IRD) in New Zealand has significantly stepped up its tax compliance efforts over the past year. According to a report released in April 2025, automated screening systems reviewed over three million tax returns, resulting in 30,000 formal reviews. Combined with voluntary disclosures, these measures contributed $859 million in additional tax revenue.
What This Means for Accountants and Clients
This heightened activity signals a shift in IRD’s compliance strategy—moving beyond correcting honest errors to actively identifying inconsistencies, undisclosed income, and deliberate non-compliance. While full audits remain relatively selective, these broader initiatives mean that both individuals and businesses can expect increased scrutiny, particularly around GST and Income Tax Returns.
Over the past year, there has been noticeable movement in the types of cases that are being flagged by IRD. GST verifications remain a primary area of focus, even though their volume has slightly declined. This continued attention highlights the importance of ensuring that GST filings are accurate and backed by thorough records.
On the other hand, reviews related to Income Tax Returns have seen a modest increase, reflecting IRD’s growing reliance on advanced data-matching technology and targeted review campaigns. Inconsistencies—especially those involving undeclared income—are more likely than ever to be flagged for investigation.
Key Areas of Risk
• GST Filings: Still IRD’s most scrutinised area. Even with a small decrease in activity, the volume of GST-related reviews remains high.
• Income Tax Returns: Under increased review due to improved detection tools and focused campaigns.
• Undisclosed Earnings: Deposits into bank accounts that don’t match reported income are a growing trigger for reviews.
What You Can Do
With the compliance environment tightening, it’s critical to ensure that all tax filings are accurate, consistent, and well-documented. At our accounting practice, we work closely with clients to proactively manage tax risk and respond effectively to any IRD queries.
If you have any concerns about your past filings or would like to review your current compliance approach, feel free to contact us. We’re here to help you stay ahead of the curve.
