The taxes we collect for the government help to fund things like education and healthcare. Taxes also provide money that’s paid out in benefits and entitlements to hundreds of thousands of New Zealanders every year through different government agencies.
Revenue trend over time
We look at the overall trend for tax revenue to see how the revenue in 2022–23 compares with revenue in previous years.
Tax revenue in 2023 was $104.5 billion.
| Year | Revenue assessed |
|---|---|
| 2018 | $72.1 |
| 2019 | $77.9 |
| 2020 | $77.7 |
| 2021 | $93.8 |
| 2022 | $100.6 |
| 2023 | $104.5 |
The year-on-year increase in tax revenue is mainly due to stronger source deductions, resident withholding tax on interest income and GST, partially offset by lower corporate tax and other persons tax. Source deductions grew by $4.752 billion (11.5%) as a result of salary and wage growth as well as growth in employment.
Revenue assured through our interventions
We assure revenue using a range of activities to make sure customers are doing the right thing. The actions we take range from interventions that promote voluntary compliance and prevent revenue loss occurring in the first place, to finding and correcting things where people have got them wrong. A key building block of voluntary compliance is tax morale, or the willingness to pay tax. Read more about customer perceptions of tax morale and trust in Te Tari Taake Inland Revenue here.
We identified or assured $973 million in revenue through our interventions
Our real-time review of returns stopped $145 million in incorrect or fraudulent refunds and tax deductions at the time of filing.
Voluntary disclosures by customers resulted in $219 million in additional revenue. $56 million of this amount was initiated from a review reported in the $145 million noted in the previous paragraph.
We used our tools, data and intelligence to ensure the integrity of COVID-19 products, identifying $267 million from declined applications or post-payment reviews.
We continued to identify tax position differences through our investigations activities, assessing $397 million in additional tax.
Note: A comparison to prior years is not possible as the components that make up the overall figure are derived from a new reporting methodology that came into effect on 1 July 2022.
We assured a further $58 million in revenue for the next 3 years
Some of our interventions result in assurance that future revenue will be returned correctly through changes in customer behaviour and an increased understanding of their obligations. We estimate how much additional revenue is assured in future years.
Note: The additional revenue assured for future years reported in the 2022 Annual Report of $49 million should have been $45 million. Future revenue benefit quantifies the effects on our compliance interventions on customers future behaviour. The estimated future revenue assured is the value of prevented revenue loss through audit activity and specific campaign results forecast over 3 years. Results are then adjusted by the rate from the output measure ‘percentage of customer whose compliance behaviour improves after receiving an audit intervention’.
Revenue assured from providing certainty
Our compliance experts provide certainty for customers on specific tax positions. Our taxpayer rulings give our interpretation of how the law applies in specific circumstances.
Advance pricing agreements provide customers with certainty on tax for specific transfer pricing arrangements for an agreed period. In return, Aotearoa New Zealand gets a level of certainty that these businesses are paying the right tax for that period of time.
- This year, we ruled on arrangements worth $11.17 billion with associated tax of more than $2.97 billion.
- On 30 June 2023, 92 customers had active advance pricing agreements with us representing approximately $440 million in assured tax each year.
Total tax debt to tax revenue
One of the ways we measure progress towards our revenue outcome is looking at the amount of overdue general tax debt as a percentage of tax revenue. In 2022–23, overdue general tax debt was 5.3% of tax revenue.
| Year | Total tax revenue | Overdue debt | Percentage tax debt to revenue |
|---|---|---|---|
| 2019 | 77.9 | 3.49 | 4.5% |
| 2020 | 77.7 | 4.08 | 5.3% |
| 2021 | 93.8 | 4.19 | 4.5% |
| 2022 | 100.6 | 4.60 | 4.6% |
| 2023 | 104.5 | 5.55 | 5.3% |
The increase in the ratio of overdue general tax debt to tax revenue was driven by a 21% increase in overdue general tax debt, reflecting the challenging economic environment. The increase in overdue general tax debt was also higher than forecast, and with higher levels of write-offs and COVID-19 remissions than expected, this resulted in unappropriated expenditure for our Impairment of Debt and Debt Write-Offs appropriation. Tax revenue increased by 4%. Read more about debt here.
Management of debt and unfiled returns
The ratio compares favourably with other similar tax administrations, some of which have ratios of as much as 10% to 14%.
We have plans to address debt growth and we provide options for customers who get into debt, including paying off what they owe in instalments. Arrangements set up in 2022–23 covered $3.4 billion in debt, compared to $2.4 billion last year, although slightly fewer customers adhered to their arrangements in 2023. Of this, $398 million has been paid in full.
Note: Overdue general tax debt and revenue figures exclude child support, student loans, Working for Families Tax Credits and COVID-19 support products.
Cost of collecting $100 in tax revenue
The indicator provides an overall measure how efficiently we collect tax revenue. The ratio compares the operating costs with the total revenue assessed. It cost us 43 cents to collect $100 in tax revenue in 2022–23.
| Year | Cents to collect $100 |
|---|---|
| 2015 | 0.80 |
| 2023 | 0.43 |
The cost to collect $100 of tax revenue has decreased from 80 cents in 2015 to 43 cents in 2023. This reduction primarily reflects considerable growth in tax revenue over this time, and to a lesser degree the efficiencies gained from higher levels of automation and straight-through processes that lower effort for customers and us.