The 2024 Inland Revenue Satisfaction Survey, jointly conducted by CA ANZ and Tax Management New Zealand (TMNZ), highlights growing concerns about New Zealand’s tax compliance environment. The survey focused on key aspects such as the cost of tax compliance, Inland Revenue (IR) services and suggestions to alleviate compliance burdens. Based on feedback from an increased respondent pool, the results released today show a growing need for more streamlined tax processes and digital integration to help ease compliance costs.

Increasing tax compliance costs

According to the results, 73% of respondents reported an increase in tax compliance costs over the past year, with only 3% seeing a decrease. CA ANZ NZ Tax Leader, John Cuthbertson FCA, highlighted that this data reinforces CA ANZ’s call for urgent action to reduce compliance costs, particularly for small to medium-sized businesses and individual taxpayers.

One of the principal contributors to these rising costs, as echoed by survey participants, is the level of detail required to comply with the domestic trust disclosure rules, and the complexity of current tax rules (e.g. foreign tax credit calculation and the tax return process to claim this). 

Recommendations for reducing compliance costs

Survey participants highlighted several key reforms that could help mitigate compliance costs.

1. Simplification of trust disclosures: The trust disclosure requirements were highlighted as the primary contributor to increased compliance costs. Nearly half (47%) of respondents supported streamlining or reducing the scope of trust disclosures to mitigate these costs.
2. Reform of fringe benefit tax (FBT): A reimagining of the FBT regime received strong support, with 27% indicating that simplifying FBT rules could help cut costs and improve compliance.
3. Leveraging digital innovations: Respondents also supported enhancing IR’s digital systems to streamline compliance processes. Recommendations included updating the Tax Administration Act 1994 to reflect a digital first approach and improving IR’s data collection processes to reduce unnecessary re-entry and duplication of taxpayer data.
4. Simplified overseas income rules: Simplifying the process for returning overseas income and claiming foreign tax credits was favoured by 33% of respondents, who felt that a more straightforward approach would reduce time and cost pressures for taxpayers with international income sources.

Inland Revenue services: Room for improvement

The results also provided insights into taxpayers’ and tax agents’ experiences with IR’s service channels. While the myIR portal remains a popular choice, with 96% of respondents using it, feedback indicates challenges with response times and information accessibility. Nearly 56% reported waiting six or more days for responses through myIR, an increase from previous years. Phone support performed comparatively better, with almost half of respondents receiving responses within the same day, though challenges with consistency and responsiveness were still noted.

Respondents managing tax debt also highlighted areas for improvement in IR’s debt-handling approach. Nearly two-thirds of respondents found that IR’s timeliness in debt recovery actions was “average” or worse, with similar feedback on consistency (62%) and efficiency (63%) of debt management processes. This feedback suggests a need for more streamlined and supportive debt-recovery processes, which could help taxpayers meet compliance requirements more easily while managing financial obligations effectively.

In terms of overall service quality, respondents rated IR’s performance as “good” in understanding taxpayer issues, but the rating was mixed for responsiveness and consistency of responses, where only 36% rated these as “good”. 

The survey results affirm CA ANZ’s concerns, including direct member feedback, about the rising tax compliance burden in New Zealand. It calls for Inland Revenue to embrace innovative digital solutions and targeted legislative and operational reforms to reduce costs and lift the service experience. CA ANZ remains committed to advocating for a more taxpayer-friendly tax administration system, where costs are kept manageable, and services are efficient, transparent and responsive.