The accountancy sector is witnessing a rise in inland revenue audit activity, as reported by a survey from Chartered Accountants Australia and New Zealand (CA ANZ) and Tax Management New Zealand.
The survey garnered 362 responses from chartered accountants in public practice.
It indicates a 7% increase from the previous year in tax debt arrangements made on behalf of clients, with 79% of accountants having entered or modified such arrangements.
One in three accountants has observed an uptick in audits compared to last year, with 41% engaging with inland revenue on audit activities this year.
The main areas of audit activity reported include GST, land issues, and foreign income and tax credits.
This increased scrutiny is accompanied by rising compliance costs, with 85% of accountants directly facing the public reporting higher tax compliance expenses.
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By GlobalDataTax Management New Zealand strategic advisor Chris Cunniffe said: 鈥淥verall accountants reported inconsistency in their experience dealing with Inland Revenue on debt matters. While some report very positive engagement with Inland Revenue on managing client debt, many were frustrated by the lack of experience of the Inland Revenue officers, and the lack of timeliness from IR on managing clients鈥� debt positions. But once arrangements are in place, accountants report that they are easy to comply with, and they are confident that clients will clear their debt positions.鈥�
Survey participants also identified several reforms that could potentially reduce compliance burdens.
Trust disclosure requirements were pinpointed as a factor in rising costs, with nearly half of the respondents advocating for a reduction in the scope of these disclosures.
Furthermore, 27% of accountants believe that simplifying Fringe Benefit Tax (FBT) rules could lead to cost savings and better compliance.
Enhancements to inland revenue’s digital systems were also suggested to streamline compliance processes.
Suggestions included modernising the Tax Administration Act 1994 to better align with digital practices and improving data collection to minimise redundant data entry.
A third of respondents also supported simplifying the process for reporting overseas income and claiming foreign tax credits, which is expected to alleviate time and cost pressures for taxpayers with international income sources.
Earlier in January 2025, CA ANZ, alongside CPA Australia and the Institute of Public Accountants, expressed concerns regarding the potential inclusion of non-bank lenders (NBLs) in the Consumer Data Right expansion.聽聽
In a joint submission to the Treasury, they cautioned that this could unfairly benefit large NBLs at the expense of consumers during the expansion process.
