Construction sector audits uncover $10m in unpaid tax

Tuesday, 10 February 2026

Construction sector audits by Inland Revenue have uncovered another $10m in unpaid tax. (File photo)

A nationwide audit of “high-risk” Inland Revenue customers will continue in 2026, with the work identifying an additional $10 million in tax obligations in 2025.

The tax department launched a multi-year programme to crack down on unpaid taxes and had focussed on companies in the construction sector since issuing a “last chance warning” to those behind on their obligations in April 2024.

By December that year, having contacted 38,380 customers in the sector, it had received lump sum payments of just over $38.8m and had arrangements in place for a further $50m in outstanding taxes to be paid.

Last year, Inland Revenue contacted 33,574 customers in the sector.

As of June, auditors had uncovered $6.6m in additional tax owed following the completion of 56 audits. At that time, the department had another 127 audits under way.

Inland Revenue had completed 45 audits since July 1, 2025, resulting in the identification of $3.5m worth of tax discrepancy.

Between January and May 2025, Inland Revenue also took action to have 205 companies, including some in the construction sector, liquidated.

Asked for an update on that work, Inland Revenue spokesperson Gay Cavill said the department was continuing its “nationwide audit activity for high-risk customers”.

Cavill said a further 45 audits had been completed since July 1 and that work had delivered “$3.5m of tax discrepancy”.

“There are also a further 145 audit cases currently under way across the country,” she said.

“We haven’t conducted any further construction site visits in the main centres since the previous update. However, planning is currently underway for additional visits across multiple sites nationwide.”

Cavill said companies in the construction sector could access support by requesting a business advisory session, by attending a seminar or by contacting Inland Revenue and requesting help.

She said the Tax Toolbox for tradies page on the department’s website also contained information for anyone needing help to get on top of any tax issues.

Liquidations hit 16-year high

Monika Lacey, chief operating officer at Centrix.

The first credit indicator report for 2026 released in January by Centrix, a company that collected information on liquidations, showed 751 construction companies were liquidated in 2025.

Centrix chief operating officer Monika Lacey said the hospitality sector ranked second with 376 liquidations in 2025, a “sharp 50% increase year-on-year, reflecting ongoing financial pressure in the industry”.

“Company failures are now at their highest level since 2010, with hospitality, retail trade, transport and construction seeing significant increases,” Lacey said, citing ongoing financial strain across parts of the economy and Inland Revenue’s ongoing crackdown on outstanding debt.

Business liquidations increased unevenly across sectors, with the sharpest rises in hospitality (50%), retail trade (34%) and transport (27%), highlighting ongoing financial stress in these sectors despite improving credit conditions, she said.

Construction (13%), manufacturing (12%) and property/rental (17%) also recorded increases in liquidations, even as credit defaults declined and average credit scores improved in many areas.

“Despite this broad rise, there are signs of resilience: agriculture recorded an 11% decline in liquidations, and several other industries showed improving stability.”