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Fix a Tax Mistake: NZ Voluntary Disclosure

17 October 2026 · Guide · Not tax advice

Short answer: IRD says a voluntary disclosure is when you tell it what is wrong with your tax returns before it finds out in some other way, for example income left out or expenses claimed that you were not entitled to. Any individual, business, trust or employer can make one at any time, in writing or by calling. IRD's page on lowering shortfall penalties says a full disclosure before the first notice of a pending audit or investigation may lower the penalty by 75-100%; after first notification but before the audit starts, or during a registration check or unannounced visit, by 40%.

How to make one (IRD)

You can use a myIR message, the IR281 form, a phone call, a letter, an office visit, or tell IRD during an interview; the 'make an amendment' option in myIR may also be available. Have your IRD or GST number, the reason, the year or period of the mistake and any outstanding returns.

Other ways penalties can be lowered

• Good record: a shortfall penalty may be cut in half if you have not paid a shortfall penalty for the same tax type in the last 4 years (2 years for PAYE, FBT, GST or RWT).
• Temporary shortfall: a 75% reduction if you reversed or corrected the shortfall within 4 years from the day after you took the tax position.
• Raising: a penalty can be raised by 25% for obstruction, such as refusing access, destroying records, lying or deliberately delaying. IRD's web page says a penalty for the same shortfall can be reduced only once for each kind of reduction. Its technical fact sheet shows that a good-record reduction of 50% can sometimes be combined with a disclosure reduction (for example 75% then 50%) (our reading). A reasonable care or unacceptable tax position penalty is capped at $50,000 in certain circumstances (fact sheet FS 26/09; section 141JAA not read).

Made-up example

A sole trader finds they forgot NZ$3,000 of income in last year's IR3. They send IRD a myIR message with the year and amount before any audit notice. IRD's table gives a range of 75–100% before any audit notice; which end applies depends on the type of penalty, which IRD decides.

Related

Late filing penalties · Use of money interest · Record keeping · IR3 due date

FAQ

Is the full 100% automatic? No. IRD's fact sheet FS 26/09 shows that a full disclosure before you are told about an audit or investigation reduces a "not taking reasonable care" or "unacceptable tax position" penalty by 100%, but a gross carelessness, abusive tax position or evasion penalty by 75%. A disclosure after you are notified but before the audit starts reduces any of them by 40%.

Does a disclosure remove the tax and interest? No; it concerns penalties.

What we could not verify

• Rates (IRD): 20% not taking reasonable care, 20% unacceptable tax position, 40% gross carelessness, 100% abusive tax position, 150% evasion.
• The legal text (Tax Administration Act 1994, section 141G) and the definition of a 'full' disclosure were not read. The fact sheet says it is not binding on the Commissioner.
• Interest on unpaid tax (separate page).
• The IRD pages show no review dates.

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