A new survey by Chartered Accountants Australia and New Zealand (CA ANZ) and Tax Management New Zealand (TMNZ) has revealed that more businesses are struggling with tax debt, while Inland Revenue (IR) has stepped up its audit activity.
Of the 362 accountants surveyed, 79% reported arranging or modifying a tax debt plan for clients, a 7% increase from last year.
Meanwhile, 41% of respondents noted a rise in IR audits, particularly in areas like GST, land transactions, and foreign income.
CA ANZ Tax Leader John Cuthbertson FCA noted that businesses have been hit hard by rising interest rates, declining consumer confidence, and a tough economic climate, leading more of them to enter tax debt arrangements. He urged businesses not to ignore tax debt and to work with their accountants to set up manageable repayment plans.
Key Findings from the Survey:
More businesses struggling with tax debt – but once payment plans are in place, 72% of accountants are confident their clients will clear their debts.
IR audit activity is increasing, especially in the construction sector, certain retail industries, and property transactions.
Compliance costs are rising, with 85% of accountants stating that the cost of tax compliance has increased.
Calls for Reform
Survey respondents highlighted several areas where changes could ease compliance costs, including:
Simplifying trust disclosures, as current requirements are a major burden.
Reforming fringe benefit tax (FBT) to reduce complexity.
Leveraging digital innovations to streamline IR’s processes.
Simplifying overseas income rules to make tax compliance easier for those with international income.
Cuthbertson reiterated CA ANZ’s call for urgent reforms, particularly to support small businesses, trusts, and individual taxpayers struggling with compliance costs.
Read the full press release here: CA ANZ