After several years of a lenient approach during the pandemic and the hangover period, New Zealand’s Inland Revenue (IR) has made it clear the ‘pay what you can’ mindset is over. Backed by an extra NZ$100+ million over the current four-year budget cycle, IR has ramped up audit and collection activity, reportedly generating NZ$10 to NZ$13 for every dollar spent.

According to the Inland Revenue Satisfaction Survey 2025, run by TMNZ and CA ANZ, 82% of tax agents have clients with unpaid tax debt. Common issues include miscalculating payroll tax, failing to include all staff in PAYE, or errors in GST and fringe benefit tax (FBT). Taxpayers found to be non-compliant likely face shortfall penalties from 20% for lack of reasonable care to 150% for deliberate evasion.

The good news is that businesses still have options to manage their position, says Matt Rama CA, chief commercial officer at TMNZ, New Zealand’s largest tax pooling intermediary.

“While IR’s enforcement stance is tougher, it also places a clear emphasis on behaviour. Businesses with tax advisers who identify issues early and take steps to correct mistakes are treated very differently from those who wait for IR to come knocking,” he says.

Take a proactive approach

Voluntary disclosure is one of the most effective ways to reduce risk, says Rama, even where a return has been filed and the tax calculation was wrong, rather than income undeclared.

“Where a mistake is identified early, businesses retain far more control over the process, including how any resulting liability is managed. Just as importantly, it signals to IR that the business is trying to do the right thing,” he says.

Tax advisers play a key role in demonstrating reasonable steps were taken. “That professional support can be critical when IR is assessing whether a business has shown reasonable care,” Rama adds.

TMNZ a smart option

When reassessments occur, tax pooling provides financial relief. TMNZ allows taxpayers to purchase backdated tax for the original due date, prompting IR to reverse high-cost use-of-money interest.

“If a return has been filed and the mistake is in the calculation or the amount, TMNZ allows you to buy backdated tax for the original due date and reduce IR interest costs by around 20–30%,” says Rama. Businesses have a 60-day window from the reassessment notice to settle through TMNZ’s pool, offering more flexibility than paying IR directly, which gives you 30 days.

“For tax advisers aware of potential tax exposures prior to 2021, now is the time to contact your clients, because historical tax inventory is limited and may not be available in the future,” says Rama. “There are still a decent amount of tax credits available to purchase for 2021 and subsequent years.”

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TMNZ is CA ANZ’s tax pooling partner in New Zealand. To learn how TMNZ can help reduce costs on reassessed tax arising from tax audits and voluntary disclosures, click here.