Accounting and Tax

New Zealand tax compliance obligations and risks taxpayers should be aware of

Greg James
17 February 2021
4 min read

17 February 2021

To reduce the tax gap - the difference between the amount of tax the Inland Revenue (IRD) would have collected if every taxpayer had paid their proper amount of taxes and the amount of tax the IRD actually collected - the IRD follows a strategy of active prevention. They do this by:

  • Identifying potential tax risk areas

  • Releasing public guidance on matters of concern

  • Targeting corporate groups through early engagement before they lodge their tax return


From a large corporate perspective, the main international risk areas the IRD will examine when a multinational sets up a business in New Zealand or does business in New Zealand include:

Transfer pricing risk

Companies that are attempting to shift the taxation of profits to the country with the lowest tax rate.

Related party debt risk

Companies with excessive debt in New Zealand to attempt to obtain the maximum deduction in New Zealand.

Offshore service hubs risk

Companies that have set up a centralised operating model to operate from a low tax jurisdiction to undertake most commercial transactions of the multinational business in New Zealand.


From an individual perspective, the risk areas the IRD are focusing on include:

Property brightline risk

Untaxed gains arising from the sale of residential land (within New Zealand and abroad) are being examined to ensure they don’t fall foul of the residential brightline tests.

Overseas income risk

New Zealand tax residents are subject to New Zealand tax on their worldwide income. With transparency between tax authorities and financial institutions across the OECD, any undisclosed income (sourced outside New Zealand) that has not been subject to the New Zealand tax net will be queried.

Tax rate restructure risk

Any restructure in light of the 39% marginal tax rate coming into effect from 1 April 2021 will be reviewed by Inland Revenue. Trust disclosure rules (from 1 April 2021) enacted in December 2020 will enable Inland Revenue to challenge any restructures made prior to 1 April 2021 if they consider there to be an element of anti-avoidance.

If you are interested in setting up a business in New Zealand, or need tax advice for your existing business in New Zealand or yourself personally, please get in touch with the Findex Tax Advisory team.



Crowe Global is a leading international network of separate and independent accounting and consulting firms that are licensed to use “Crowe” in connection with the provision of professional services to their clients. Crowe Global itself is a non-practicing entity and does not provide professional services to clients. Services are provided by the member firms. Crowe Global and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.


© 2021 Crowe Global


Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd.


Services are provided by Findex NZ Limited an affiliate of Findex (Aust) Pty Ltd


© 2021 Findex (Aust) Pty Ltd.


Findex NZ Limited (Findex) trading as Crowe


While all reasonable care is taken in the preparation of the material in this article, to the extent allowed by legislation Findex accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex assumes no obligation to update this material after it has been issued. You should seek professional advice before acting on any material.


An Adviser Disclosure Statement is available on request and free of charge.

This document contains general information and is also not intended to constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.


The title 'Partner' conveys that the person is a senior member within their respective division and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately-owned organisation and/or its subsidiaries.


© Findex Group Limited 2021. All rights reserved


February 2021

Author: Greg James | Senior Partner