June 5, 2025 • 5 mins
Inland Revenue's cracking down on unpaid tax bills.
It's been allocated an extra $35 million in Budget 25 to boost its tax compliance and collection activities.
The tax department expects to return an additional $4 for every dollar in the first year, and $8 in year two.
IRD Commissioner Peter Mersi told Mike Hosking it's hard to estimate how much tax is owed across the board.
He says they don't really know the size of the gap, but believes it's around $9 billion.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Now the iidea back in what appears to be a
concerted effort to hoover up the money we owe them.
There's a crackdown on unpaid tax. The budget handed them
an extra thirty five million dollars a year to boost
the tax compliance and collection activities. The IID Commissioner is
Peter Mercy, and he is, well, there's Peter. Morning to you.
Speaker 2 (00:15):
Good morning, Mike.
Speaker 1 (00:16):
I must congratulate you, generally speaking, because I haven't spoken
to you as far as I know ever, but you
seem to be collecting huge amounts of money at the moment,
and something's happened. What's happened?
Speaker 2 (00:30):
Look, I think a couple of things. One is, about
ninety four percent of New Zealanders pay their tax in
full and on time. So we have a system that
works very well. It brings on the bulk of our tax.
But it's fair to say that through COVID we took less,
we took away our focus from some of our compliance activities,
and that was quite deliberate as we came out of COVID.
(00:52):
So from the beginning of twenty three we've started to
put greater focus on our compliance activities right across the board,
reminding people their obligations, but actually doing a lot more
audits and investigations and making sure that we are there
when they need us.
Speaker 1 (01:09):
Okay, so that's a nice way. But were you under
instruction to take it easy during COVID. Basically no.
Speaker 2 (01:15):
Look, I wasn't there at the time, But my understanding
was that because of the economic uncertainty that existed at
the time, it was very difficult to tell whether entities
were in financial strife because of an unusual event and
that they were fundamentally sound, or whether they were actually
not viable. Now, our legislation requires us to maximize revenue
(01:37):
over time, so if an entity is financially viable, we
want to help them back to get back to being compliant.
During that period, it was very difficult. So I think
one of the consequences of that, though, is that as
we started to ramp up compliance from the beginning of
twenty twenty three, not only were we finding those businesses
that during COVID, frankly you were not viable, but also
(02:00):
you get the double whammy because then the economic situation
at the time during twenty twenty three to four, etc.
You have other firms that get into trouble, So there
was probably a bit of a backlog that built up
during COVID, but I don't it was very hard to
tell who was sustainable and who was not.
Speaker 1 (02:18):
There seems to be a technological leap in there somewhere.
Am I correct in saying that you seem to have
got a new computer or something.
Speaker 2 (02:24):
Yes, well it's more than a new computer. We did
what was called business transformation, so at one point two
billion dollar change, which was more than just it. We
completely redesigned the way in which we think about tax
to try and make it a lot easier, a lot
more automated. It does mean that we can make tax changes.
(02:44):
For example, if the government makes, for example, investment boost,
we can make that change much more quickly than we
used to. But fundo entity, it means that the computer
and our systems are doing much more automatically than they
used to. They can screen gest forms that come through,
for example, and identify those that are unusual, so we
have much better systems in place.
Speaker 1 (03:05):
Are you cracking down on the lay about students who
have scarped and not paid what they are.
Speaker 2 (03:11):
Yes, we had a particular focus on overseas student loan borrowers.
Last year. We've had a forty three percent increase in
the amount of money we've received in the nine months
this year as a result of that crackdown. And look,
we're actively continuing to pursue conversations with those people, many
(03:33):
of them. Once we get in touch with them, we
can set up repayment arrangements and so on. But look
for those that deliberately choose not to make their payments,
we have whole range of strategies, including contacting them as
they come back to New Zealand, and we do have
the potential to arrest them at the border of necessary.
Speaker 1 (03:49):
Where are we at the bankruptcy business and in the cycle,
in other words, are you seeing some sort of through
the worst of this or we've still got some ways
to go in terms of people who are going to
go to the war.
Speaker 2 (04:01):
Yeah. Look, I think if you look at what's happening
to the economy more generally, we are starting to come
out of what the of the recession. What you get
from the liquidations and bankruptcy perspective, as you do get
a lag so I would expect to continue to see
that increasing over the next six to twelve months. Really
as a lag out of that previous economic cycle. I
(04:23):
also think because we are putting more effort and focus
into that area, that is also listed the number of
businesses that find themselves in that situation.
Speaker 1 (04:31):
Not that this is real, but let me ask it,
because it's fun Friday anyway. If you could magic today
all the money that's owed, and that's all the student debt,
all the child support particularly, etc. How much is out
there to be collected.
Speaker 2 (04:45):
Well, that's a really hard question to answer. So we
don't really know the size of that gap. You know,
we know that people are us around nine billion dollars.
That's a lot of money. So even if everyone who
owed us money went through that process and paid it back,
that would be nine million dollars nine dollars. So yeah,
(05:06):
there's a bit out there.
Speaker 1 (05:07):
It's a lot of money. Appreciate it very much. Peter Mercy,
who is the he's the head of IRD, I must
say in my dealings with them in the last couple
of years, not that it matters that much, but I
for a while they've got refunds, and then that changed anyway,
so I don't get them anymore. But when it used
to be, when I got some refunds, they would take weeks,
(05:27):
if not months, to pay. So in other words, when
you owe them money, they give you a time and
a date and held pay if you don't do it.
When they owed you money all of a sudden, we'll
get around of it sometime. But that all changed and
they improved themselves. And I've had nothing but very pleasant
and useful dealings with the IID for a number of years,
which is good. I mean, I pay far too much tax,
of course, but that's not their fault. That's the governments.
(05:48):
For more from the Mike Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio
Now the iidea back in what appears to be a
concerted effort to hoover up the money we owe them.
There's a crackdown on unpaid tax. The budget handed them
an extra thirty five million dollars a year to boost
the tax compliance and collection activities. The IID Commissioner is
Peter Mercy, and he is, well, there's Peter. Morning to you.
Speaker 2 (00:15):
Good morning, Mike.
Speaker 1 (00:16):
I must congratulate you, generally speaking, because I haven't spoken
to you as far as I know ever, but you
seem to be collecting huge amounts of money at the moment,
and something's happened. What's happened?
Speaker 2 (00:30):
Look, I think a couple of things. One is, about
ninety four percent of New Zealanders pay their tax in
full and on time. So we have a system that
works very well. It brings on the bulk of our tax.
But it's fair to say that through COVID we took less,
we took away our focus from some of our compliance activities,
and that was quite deliberate as we came out of COVID.
(00:52):
So from the beginning of twenty three we've started to
put greater focus on our compliance activities right across the board,
reminding people their obligations, but actually doing a lot more
audits and investigations and making sure that we are there
when they need us.
Speaker 1 (01:09):
Okay, so that's a nice way. But were you under
instruction to take it easy during COVID. Basically no.
Speaker 2 (01:15):
Look, I wasn't there at the time, But my understanding
was that because of the economic uncertainty that existed at
the time, it was very difficult to tell whether entities
were in financial strife because of an unusual event and
that they were fundamentally sound, or whether they were actually
not viable. Now, our legislation requires us to maximize revenue
(01:37):
over time, so if an entity is financially viable, we
want to help them back to get back to being compliant.
During that period, it was very difficult. So I think
one of the consequences of that, though, is that as
we started to ramp up compliance from the beginning of
twenty twenty three, not only were we finding those businesses
that during COVID, frankly you were not viable, but also
(02:00):
you get the double whammy because then the economic situation
at the time during twenty twenty three to four, etc.
You have other firms that get into trouble, So there
was probably a bit of a backlog that built up
during COVID, but I don't it was very hard to
tell who was sustainable and who was not.
Speaker 1 (02:18):
There seems to be a technological leap in there somewhere.
Am I correct in saying that you seem to have
got a new computer or something.
Speaker 2 (02:24):
Yes, well it's more than a new computer. We did
what was called business transformation, so at one point two
billion dollar change, which was more than just it. We
completely redesigned the way in which we think about tax
to try and make it a lot easier, a lot
more automated. It does mean that we can make tax changes.
(02:44):
For example, if the government makes, for example, investment boost,
we can make that change much more quickly than we
used to. But fundo entity, it means that the computer
and our systems are doing much more automatically than they
used to. They can screen gest forms that come through,
for example, and identify those that are unusual, so we
have much better systems in place.
Speaker 1 (03:05):
Are you cracking down on the lay about students who
have scarped and not paid what they are.
Speaker 2 (03:11):
Yes, we had a particular focus on overseas student loan borrowers.
Last year. We've had a forty three percent increase in
the amount of money we've received in the nine months
this year as a result of that crackdown. And look,
we're actively continuing to pursue conversations with those people, many
(03:33):
of them. Once we get in touch with them, we
can set up repayment arrangements and so on. But look
for those that deliberately choose not to make their payments,
we have whole range of strategies, including contacting them as
they come back to New Zealand, and we do have
the potential to arrest them at the border of necessary.
Speaker 1 (03:49):
Where are we at the bankruptcy business and in the cycle,
in other words, are you seeing some sort of through
the worst of this or we've still got some ways
to go in terms of people who are going to
go to the war.
Speaker 2 (04:01):
Yeah. Look, I think if you look at what's happening
to the economy more generally, we are starting to come
out of what the of the recession. What you get
from the liquidations and bankruptcy perspective, as you do get
a lag so I would expect to continue to see
that increasing over the next six to twelve months. Really
as a lag out of that previous economic cycle. I
(04:23):
also think because we are putting more effort and focus
into that area, that is also listed the number of
businesses that find themselves in that situation.
Speaker 1 (04:31):
Not that this is real, but let me ask it,
because it's fun Friday anyway. If you could magic today
all the money that's owed, and that's all the student debt,
all the child support particularly, etc. How much is out
there to be collected.
Speaker 2 (04:45):
Well, that's a really hard question to answer. So we
don't really know the size of that gap. You know,
we know that people are us around nine billion dollars.
That's a lot of money. So even if everyone who
owed us money went through that process and paid it back,
that would be nine million dollars nine dollars. So yeah,
(05:06):
there's a bit out there.
Speaker 1 (05:07):
It's a lot of money. Appreciate it very much. Peter Mercy,
who is the he's the head of IRD, I must
say in my dealings with them in the last couple
of years, not that it matters that much, but I
for a while they've got refunds, and then that changed anyway,
so I don't get them anymore. But when it used
to be, when I got some refunds, they would take weeks,
(05:27):
if not months, to pay. So in other words, when
you owe them money, they give you a time and
a date and held pay if you don't do it.
When they owed you money all of a sudden, we'll
get around of it sometime. But that all changed and
they improved themselves. And I've had nothing but very pleasant
and useful dealings with the IID for a number of years,
which is good. I mean, I pay far too much tax,
of course, but that's not their fault. That's the governments.
(05:48):
For more from the Mike Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio
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