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Our prosecution guidelines


Prosecution is one way the Commissioner of Inland Revenue protects the integrity of the tax and social policy systems she is statutorily responsible for. It is an enforcement activity, usually of last resort, applied in conformity with the Solicitor-General's Prosecution Guidelines supplemented by these Guidelines, against those who refuse to comply with their tax or social policy obligations or who abuse benefits. The sanction of criminal conviction and punishment assures compliant taxpayers, who indirectly bear the burden of others non-compliance, that the Commissioner will take enforcement action against non-compliers.

These Guidelines set out:

  • their link to Inland Revenue's strategic goals and direction
  • the types of non-compliance that may result in a decision to prosecute
  • the factors, in addition to those in the Solicitor-General's Guidelines, that may influence a decision to prosecute
  • the choice of charges
  • the Commissioner's approach to publicising prosecution results
  • the Commissioner's approach to measuring prosecution activity.

These Guidelines are designed to ensure a consistent approach to IR prosecutions nationally.

The link to Inland Revenue's strategic goals and direction

Inland Revenue's strategic direction is directed at:

  • contributing to the economic and social well-being of New Zealanders by collecting and re-distributing money;
  • making revenue available to fund government programs through people meeting payment obligations of their own accord;
  • people receiving entitlements that enable them to participate in society.

Compliant customers:

  • register with Inland Revenue when the law requires them to
  • provide complete and accurate information
  • file returns and other information required by law on time
  • pay correct amounts on time
  • claim and receive only what they are entitled to.

Inland Revenue's compliance model

Compliance for Inland Revenue is when customers pay the taxes and get the entitlements they should.

We want to help customers get it right from the start, rather than correct them when they get it wrong. Central to this is better understanding our customer’s needs and behaviours in a way that enables the Commissioner to consider and apply a much wider range of approaches to assist customers comply - being more proactive and making it simpler and more certain for customers.

Our new compliance model is part of Inland Revenue’s transformation journey and strategic direction. It comprises three moveable wheels that integrate customer behaviours (the inner circle), principles (the middle circle) and activities (the outer layer) in a way that helps us think more widely about customer needs and behaviours and tailor the compliance approach most appropriate for them. We recognise that most customers comply most of the time and we want to continue to encourage and facilitate this using our new compliance model to help build an environment that supports customers right from the start.

Compliance model 

Unfortunately, some customers choose not to comply with their obligations or intentionally seek to mis-represent their personal or business circumstances in order to reduce the tax they are required to pay, or to obtain refunds, claims or entitlements they are not eligible for.  In these contexts, the Commissioner may seek to enforce compliance through prosecution actions as part of her statutory responsibility to protect the integrity of the tax and social policy laws entrusted to her.  

These prosecution guidelines support these statutory responsibilities by describing the parameters that are designed to ensure prosecution:

  • Is an appropriate, consistent and fair response for the type and level of non-compliance identified
  • Positively influences future compliance by appropriate publication of convictions
  • Is an integral component of a balanced compliance programme
  • Recognises and affirms positive compliance behaviors and norms.

The types of non-compliance that may result in a decision to prosecute

The Commissioner may prosecute criminal non-compliance in the tax and social policy areas she administers (listed in the schedule to the Tax Administration Act 1994 [‘TAA']), consistently with s6 and 6A of that Act. She may also formulate, where appropriate, charges under other Acts, e.g. the Crimes Act.

The Commissioner works with other law enforcement agencies to deal with non-compliance. Subject to s18D of the TAA and relevant protocols, the Commissioner may refer cases to the Serious Fraud Office or the New Zealand Police.

Types of non-compliance that justify prosecution

Examples of non-compliant behaviours that may justify prosecutions are:

  • non-filing of returns when due with intent to evade assessment and payment of liabilities, including child support
  • falsifying documents intended to be provided to the Commissioner
  • false representations to the Commissioner (including by concealment of or failure to provide relevant information)
  • obstruction of the Commissioner in the execution of her duties
  • misuse of revenue held in trust, such as PAYE, GST, Student Loan deductions, and employee KiwiSaver contributions
  • failure to make deductions required by law, e.g. PAYE or child support
  • false refund/deduction/rebate claims against the Commissioner
  • laundering the proceeds of offences against the Revenue.

The Commissioner may also prosecute third parties for aiding, abetting, or conspiring in, the commission of criminal conduct or for inciting, counselling or procuring tax payers to engage in such conduct.

Voluntary disclosures and their effect on prosecutions

The Commissioner will not normally prosecute a taxpayer where the taxpayer has made a pre-notification voluntary disclosure as defined in section 141G of the TAA (SPS19/02 paragraphs 91 and 93) in respect of that person's tax position. This is not a rule of law, but a policy decision made to encourage voluntary compliance in the spirit of the reduction in shortfall penalty that accompanies a voluntary disclosure.

In circumstances where the Commissioner forms the view that a taxpayer’s actions or omissions are such that non-prosecution could lead to voluntary compliance more generally being undermined, the Commissioner may still proceed with that subsequent prosecution action. A decision to prosecute in these circumstances will be rare and limited to serious offences.

Factors additional to those in the Solicitor-General's Prosecution Guidelines that may influence a decision to prosecute

The Solicitor General's Prosecution Guidelines

The Solicitor-General's Prosecution Guidelines emphasize several points of a prosecution system operating under the rule of law in a democratic society. The first is that the prosecutor must be free of pressure from sources not properly part of the prosecution decision-making process. The second deals with the prosecution decision itself. Under New Zealand's common law adversarial system, a prosecutor must be satisfied of two things: (i) that the Evidential Test is met, i.e. that there is evidence sufficient to provide a reasonable prospect of conviction, and (ii) that the Public Interest test is met, i.e. that only those breaches of the criminal law where the public interest warrants a prosecution will proceed to that step.

The Evidential Test

The Evidential Test is fundamental. There must never be a prosecution without evidence providing a reasonable prospect of conviction.

The Public Interest Test

The Solicitor-General's Prosecution Guidelines on the Crown Law website includes an illustrative list of Public Interest considerations. They apply to all Inland Revenue cases. They are not repeated here.

Read the Solicitor-General's Prosecution Guidelines

The Commissioner's Public Interest factors

In addition to the Solicitor-General's Public Interest factors, the Commissioner also considers the following revenue-specific factors.

Factors favouring prosecution are:

  • conformity with IR compliance strategies, especially current risk factors (e.g. hiding profits of real estate sales or failing to declare cash jobs/sales)
  • a history of non-compliance (not restricted to previous convictions)
  • the degree of non-compliance (e.g. the gravity & prevalence of offending)
  • loss to the Revenue (greater loss = more reason to prosecute)
  • damage to the integrity of the Revenue (e.g. attempts to undermine the administration of the Revenue Acts)
  • misuse of corporate entities for a criminal tax purpose (e.g. phoenixing or using multiple entities to facilitate GST fraud)
  • organised and systematic attacks on the tax or social policy systems, (e.g. planned and sustained programs of tax evasion or false GST claims)

Factors against prosecution are:

  • the availability of effective alternatives to prosecution (e.g. where a defaulter has made good the losses to the Revenue, has paid any interest, and the educational/compliance/integrity/deterrence aspect is met by imposition (i.e. assessment) of a suitable civil [e.g. evasion, promoter or obstruction shortfall] penalty)
  • where alternatives to prosecution are available and a prosecution, though still justifiable, would consume resources that could be better used elsewhere.

The choice of charges

Substantive matters

Though generally the TAA is more suited to prosecuting tax evasion (Gilchrist v R [2007] 1 NZLR 499), some tax offending is better dealt with under the Crimes Act (R v Morris (2005) 22 NZTC 19,217). Many offences against the Revenue fall within the definitions of crimes in both Acts. The crimes in Part 10 of the CA are particularly suited to Revenue offending. They deal with generally dishonest conduct, including false representations, crimes involving computers and money laundering. Sections in other Parts may be used as appropriate.

The choice of charges depends on the evidence, the avoidance of technicalities and the ease of explaining specific crimes to juries. Public interest factors also bear on the choice of charges. A serious obstruction of the Commissioner may be more suitably prosecuted as perverting, obstructing or defeating the course of justice under the Crimes Act rather than obstructing the Commissioner under section 143H TAA.

Procedural matters

Section 150 of the TAA authorises Inland Revenue, unlike other institutions with prosecution functions, to include more than one of certain TAA charges in a charging document. This provision is used for convenience and administrative ease, as revenue offending often involves multiple repeated conduct, in which only the date of offending is materially different. Each charge remains a separate count. The Commissioner will almost invariably apply this section when charging someone with qualifying TAA offending.

Section 20(2) of the Criminal Procedure Act 2011 (CPA) provides for representative charges. This provision allows multiple offences of the same type to be included in a single count in a charging document if the offending occurs in similar circumstances such that the defendant would be likely to enter the same plea to the charges if they were charged separately, and the number of offences would make it difficult for the court to manage if charged separately but tried together. The Commissioner will consider whether the facts of a case make representative charges appropriate.

In suitable cases the Commissioner may file charges in the alternative or use the included offence provision of the CPA (section 143).

Categories of offences

There are only two types of hearing: judge-alone trials and jury trials. All charges fall under 4 categories of offence, each with slightly different procedures. The crimes that the Commissioner may prosecute are Category 1 (punishable by fines), a few Category 2 offences (punishable by imprisonment for less than 2 years) or Category 3 offences (punishable by imprisonment for 2 years or more).

Category 1 and 2 offences are tried in the District Court before a judge alone. All but one of the offences in sections 143 and 143A of the TAA are Category 1 offences. The exception is section 143A(1)(d), which has a potential sentence of 5 years imprisonment, and which is therefore a Category 3 offence.

Category 3 offences are those punishable by imprisonment for 2 years or more that are not Category 4 offences. Category 3 offences are tried in the District Court unless there is an order transferring the case to the High Court. Defendants may elect trial by jury.

All TAA offences that are not Category 1 offences are Category 2 or 3 offences. The Crimes Act offences that the Commissioner will usually consider are all Category 3 offences.


The Commissioner may publicise convictions for tax offences based on public interest, including deterring future non-compliance, encouraging and reinforcing compliant behaviours and maintaining society's perception of the integrity of the tax and social policy systems.

Measuring prosecution activity

The Commissioner will periodically review:

  • the range and nature of IR prosecution cases
  • the outcomes of these cases
  • IR decision-making processes for robustness, impartiality and conformity with the law and IR strategies and responsibilities
  • the effective and efficient use of our resources in undertaking prosecution activities
  • the influence of these outcomes on compliance behaviour and protecting the integrity of the tax and social policy systems.