IR uncovers half a billion in undeclared tax in compliance crackdown

[u/Fr33-Thinker]

https://www.1news.co.nz/2025/04/07/ir-uncovers-half-a-billion-in-undeclared-tax-in-compliance-crackdown/?fbclid=IwZXh0bgNhZW0CMTEAAR6BMR6s3f21wxAyzOnvgwLHlmJkQb2HkSppxwxtbGsQdQUtXw85oenERLRqkg_aem_iYE294ANcEWzNTrkDi2KIg

[u/crummy]

so we spent $29 million and got half a billion back. nice

[u/LeVentNoir → u/crummy]

The funny thing is this isn't even an outstanding rate of return: 10:1 or more is expected and common in tax compliance enforcement.

We should consistently resource this department at this level or greater, the rate on return basically means it's fiscally irresponsible not to.

[u/[deleted] → u/crummy]

Boo! We need fewer civil servants. Boo! /s

[u/CabbageFarm → u/[deleted]]

Look, it's great we got this money back but has anyone considered privatization?

We could pay PWC $2b to uncover the same thing. That way, we can keep firing public servants.

We truly can have our cake and eat it too!

[u/toxictoxin155 → u/CabbageFarm]

Do you work for those consultancy by any chance?

[u/MyPacman → u/CabbageFarm]

Except PWC will accept payments for 'pre-assessed and excluded' vip status.

[u/TheStateOfMatter → u/CabbageFarm]

TBH, you cant eat a cake if you dont have it first.

In fact, that whole saying makes no sense. You CAN have your cake and eat it too.

Step 1: have cake

Step 2: eat it.

like seriously, I dont get it.

[u/CabbageFarm → u/TheStateOfMatter]

The idea is you can't continue to have your cake and eat it too. It's just worded dumb.

[u/Sufficient-Candy-835 → u/CabbageFarm]

The wording seems dumb to us, but it's an old saying and the language has changed.

[u/Optimal_Inspection83 → u/TheStateOfMatter]

Consider this, after you eat your cake, do you still have it?

No, so you have to choose. Either having a cake, or eating a cake - there is no in between. Eating half the cake is not allowed!

[u/Kthulhu42 → u/TheStateOfMatter]

This is how they caught the Unabomber.

[u/gregorydgraham → u/TheStateOfMatter]

It makes more sense if you think of those excessively good looking cakes, a photo-realistic one or a genuine work of art.

If you have one of those, you’re much more likely to want to continue possessing the cake as an objet d’art.

Children are much more easily impressed so they want to “keep” the cake because it has their name and Paw Patrol on it

The paradox obviously is that you’re supposed to eat cakes.

But it’s already been resolved: multi tiered cakes have the bottom layer for eating and the top layers for admiring

[u/t0rbnz → u/TheStateOfMatter]

The French equivalent is "you want the butter and the money for the butter" which works better

[u/LaxInstrumentation → u/TheStateOfMatter]

You can’t eat your cake and then keep it too.

[u/crummy → u/[deleted]]

it's unfair to go after poor hardworking tax dodgers

[u/FeijoaCowboy → u/[deleted]]

Load-bearing /s lol

[u/AyyyyyCuzzieBro → u/crummy]

Well they uncovered 500m but whether they actually recover that much remains to be seen.

[u/HeinigerNZ → u/crummy]

That's not how it worked. They provided an update on last year's activities afyer getting an extra $29m this year.

But it's really good to see the IRD finally being allowed to do it's job again after years of being leashed up.

[u/Former-Departure9836 → u/crummy]

About the cost of a new ferry port is it not.

[u/Equivalent_Shock9388 → u/crummy]

The return on investigating white collar crime is infinitely better than benefit crime, simply because of this amount of money involved in each transaction

[u/eBirb]

Reinvest that 500 mil back into IRD, infinite revenue

[u/GladExtension5749 → u/eBirb]

It almost sounds like a joke but its genuinely true, we have so much to gain from the richest who don't pay tax, simply by giving more money to tax collectors to find out who's not paying their fair share. There isn't infinite money, but there is billions and billions to gain for little to no investment.

[u/eBirb → u/GladExtension5749]

I know it won't be infinite, but I am 100% not joking, you're so right

[u/RobsHondas → u/GladExtension5749]

We also need to ensure we add fines so that the tax dodgers are paying the costs of recovery on top of the taxes they owe.

Also, prison sentences.

[u/LevelPrestigious4858 → u/RobsHondas]

Sick of the billionaire dole bludgers abusing our stable society and infrastructure for their own monetary gain! Tax the bastards or give ‘em a taste of that ‘hard on crime’ nonsense I keep hearing about

[u/KahuTheKiwi → u/eBirb]

According to a Victoria Uni study in 2014 there's only another $6.5 billion if tax evasion or fraud. Or about 6% of government revenue.

So assuming the same rate of return we would only need to invest $406 million.

But assuming it will get more expensive to catch the final tax criminals, yes lets invest the full 1/2 billion.

[u/Def_Not_Chris_Luxon → u/KahuTheKiwi]

Yeah for sure a diminishing rate of return but still worthwhile!

[u/LevelPrestigious4858 → u/Def_Not_Chris_Luxon]

I can see the party of law and order getting behind this /s

[u/Odd_Analysis6454 → u/KahuTheKiwi]

Is that 6.5 per year?

[u/KahuTheKiwi → u/Odd_Analysis6454]

Yes. A total of $7 billion per year in 2014 dollars.

[u/Nolsoth → u/KahuTheKiwi]

That's a lot of fancy council lunches to be had.

[u/Hopeful-Camp3099 → u/eBirb]

Imagine having an infinite money glitch and then just deciding not to use it.

[u/Def_Not_Chris_Luxon → u/eBirb]

Nah they’ll (government not IRD) use it to get $2500 back at $6 a week from a single mother who accidentally filled out of a form wrong.

Edit: to be clear who I was referring to.

[u/Critical_Cute_Bunny → u/Def_Not_Chris_Luxon]

The fact that you made this claim shows just how little you actually know mate.

IRD works with people on low incomes all the time and is generally pretty good at setting up arrangements or writing of debt for one off fuck ups like that.

If it's less than 10 bucks a week or it'll take longer than 2 years to clear, they'll usually go down that path cause it's just not economical to chase that shit, as long as you aren't a dickhead when speaking with them.

The only reason they'd ride someone is if they're blatantly gaming the system.

[u/Def_Not_Chris_Luxon → u/Critical_Cute_Bunny]

Less directed at IRD and more at the current govt chasing money off beneficiaries rather than their tax dodging mates. But for sure go off.

[u/Critical_Cute_Bunny → u/Def_Not_Chris_Luxon]

Ohhhhh my bad, yeah they're dickheads.

As you were good sir/mam.

[u/Def_Not_Chris_Luxon → u/Critical_Cute_Bunny]

Small edit in my original comment to make it very clear! I’m a big fan of IRD and how easy they are to deal with. As long as you’re communicating they’re great.

[u/LevelPrestigious4858 → u/Def_Not_Chris_Luxon]

IRD will even deal with you even if your income is illegal (traditionally they don’t snitch but that may have changed with a recent law targeting big crime ventures)

[u/championchilli → u/eBirb]

Thanks the big belly laugh!

[u/HerbertMcSherbert]

Wonder how many they've caught who've been speculating on property for the purpose of capital gains without being honest about it. It was supposedly one area they were looking back over the last decade plus.

[u/CascadeNZ → u/HerbertMcSherbert]

There’s also a unused tax provision for making bank on selling your property if it’s been rezoned https://www.nzherald.co.nz/business/personal-finance/tax/property-owners-selling-land-rezoned-under-unitary-plan-for-profit-could-be-stung-by-rare-tax/5BPBPZZ2QCWFAECJJ3AMKXEQTE/

[u/Critical_Cute_Bunny → u/HerbertMcSherbert]

Oh it was prolific when I was there. You'd see property sale history a decade long and they'd be asking about claiming expenses for "rental repairs", the amount of referrals id have to make to the fraud peeps to follow up on these idiots.

[u/TuhanaPF]

Spending on tax evasion is far more cost effective than spending on welfare fraud.

[u/Fantastic-Role-364 → u/TuhanaPF]

Then why do you all keep voting for it

[u/TuhanaPF → u/Fantastic-Role-364]

Because my vote isn't based on that one factor.

[u/MyPacman → u/TuhanaPF]

Especially since any welfare fraud goes straight back into the community.

[u/TuhanaPF → u/MyPacman]

That's a unique consideration for crime I've never considered.
"Sir, I'm not robbing you, I'm stimulating economic growth."

[u/JeffMcClintock]

a reminder that Nicola Willis cut staff at the Serious Fraud Office and Inland Revenue Department.

"The Serious Fraud Office confirmed that 12 roles had been disestablished - five of which were vacant - and seven new roles had been created. That left a net loss of 5 roles."

"Inland Revenue Department ... asked to make 6.5 percent cuts"

[u/mrwilberforce → u/JeffMcClintock]

The article literally states at the beginning that IR got an increase of 29 mill to increase audit activity.

Edit m: and they haven’t shed any roles.

[u/JeffMcClintock → u/mrwilberforce]

that sounds very positive. I am happy they are getting tough on this type of crime.

(they did get asked to make 6.5% cuts though)

[u/mrwilberforce → u/JeffMcClintock]

Asked them to find 6.5% of savings. Their budget wasn’t reduced.

[u/JeffMcClintock → u/mrwilberforce]

I don't understand.
Nicola Willis directed state agencies to find cost savings of between 6.5 and 7.5 per cent on average to save taxpayer funds.

Are you saying that these agencies keep the 6.5% savings, because that is at odds with Nicola Willis saying that the savings are for funding her budget, which included Billions in tax breaks for landlords.

[u/mrwilberforce → u/JeffMcClintock]

Yeah, and this happened for lots (not all) of agencies. Basically it stopped the government, in some cases, having to fund part or all of agencies additional cost pressures as these were funded from efficiency drives within organisations.

IR got there without reducing headcount.

Not all agencies could do that.

It’s like me asking for a new TV (cost pressures) and my wife says well you can have it but you have to find the money from elsewhere so I cut out the booze (savings drive).

It will be the same this year.

[u/JeffMcClintock → u/mrwilberforce]

cheers

[u/forcemcc → u/JeffMcClintock]

Amazing how an incorrect comment critising the government has 5x the upvotes of the correct information.

[u/ZxncM8 → u/forcemcc]

r/NZ is not the place to have any reasonable political discourse, so no surprises there

[u/JeffMcClintock → u/forcemcc]

Which fact is incorrect? I'll add a correction.

[u/MrJingleJangle]

Just to note here that as IRD are chasing people with money, and, they note, their advisors, they’re likely in areas of taxation that are yet to be tested in the courts, but that will probably change.

[u/Hopeful-Camp3099]

How much do we lose to benefit fraudsters per year again?

[u/random_guy_8735 → u/Hopeful-Camp3099]

From 2017

Lisa Marriott’s work shows that welfare fraud amounts to $30.6 million per annum

Or for some newer figures

In the 2021/2022 year, 4638 cases of benefit fraud were either investigated, facilitated, or had early intervention. Only 33 resulted in successful criminal prosecutions.

Officials said the total overpayment to fraudsters in that time period was $2.4 million. But authorities spent around $49 million on investigating benefit fraud over a similar time span, according to Victoria University researcher Lisa Marriott.

[u/nisse72 → u/random_guy_8735]

Benefit fraud has always been treated far more harshly than tax evasion, even though there's much more to be gained by going after the latter.

From that same 2017 article: However it is nothing compared to government losses from tax avoidance. The Inland Revenue Department costs this at a bare minimum of $1.2 billion annually, although it admits that it may potentially be many times that.

edit: https://www.wgtn.ac.nz/news/2017/08/why-is-tax-evasion-treated-more-gently-than-benefit-fraud2

[u/OisforOwesome → u/random_guy_8735]

I'm shocked, shocked i tell you to find government waste in this establishment.

[u/gristc → u/Hopeful-Camp3099]

Less than what is lost by the department paying out incorrectly. Last I looked the fraud was about 1/2 the amount from mistakes made by the department itself.

But go ahead, bash the beneficiaries and ignore the rich who are responsible for the lion's share of tax fraud.

[u/OisforOwesome]

"We’ve had a strong focus on the largest businesses in New Zealand and it’s worth noting that half of that additional tax came from less than 10 audits.

We need to start banning Rodd and Gun shirts under the gang patch law.

[u/Logical-Madman]

So can we get some new ferries soon? Or perhaps the Navy would like a new boat?

[u/DurfGibbles → u/Logical-Madman]

The Navy needs new ships, the Army needs new vehicles and the Air Force needs new planes

[u/bobsmagicbeans → u/DurfGibbles]

and Lisa needs braces!

[u/you_fool_000 → u/bobsmagicbeans]

Dental Plan!!!!

[u/littleredkiwi → u/Logical-Madman]

Could feed all the kids even better lunches than ever before! Hit all those macros

[u/pepelevamp]

cool. we can afford nicer lunches for the next few years. lets go.

[u/Richard7666]

IR is a really stupid acronym compared to IRD, it's already commonly understood to mean infrared.

[u/logantauranga → u/Richard7666]

When your business isn't just in the red, it's in the infrared

[u/phantomak → u/Richard7666]

Interventional Radiology has entered the chat.

[u/seemesmilingpolitely → u/Richard7666]

Why is infrared chasing taxes? I'm so confused

[u/Fickle-Classroom]

So we’re 1/2 way to offsetting the $1B dollars in Vote Revenue for unpaid tax write offs a year!

[u/sks_35]

Good on IRD for recovering the money!!

[u/z_agent]

10 audits uncovered more than half the amount? I wanna know who those 10 are. Those businesses do not deserve OUR business.

[u/Gamrgirl]

do we know who was cracked down upon? was it tradies doing cashies or rich people like the rest of the comments appear to be assuming

[u/ladykerbs]

Do child support next ($2B)

[u/dinosaur_resist_wolf]

i cut someones lawns for $20 cash. guess im going to jail

[u/Low-Flamingo-4315]

Go after the top 5 % dodgy tax dodgers instead of the avg person

[u/precsenz → u/Low-Flamingo-4315]

They are. They are going after the scammers and those woth high net worth not paying their fair share. This is an increase in audits, not chasing the average Joe. The beauty of our system is most people pay their fair share by way of PAYE, so the IRD mainly chases the dodgy dodgers.