Inland Revenue is getting an information technology upgrade which will cost between $1 billion and $1.5 billion over the next 10 years.
Revenue Minister Peter Dunne said the department's revenue system is at capacity.
He said it started simply as a tax system, but has since taken on child support, student loans, KiwiSaver and Working for Families.
Mr Dunne said more than 1.2 million customers now use online options, 630,000 use voice ID to verify their identity, while a further 24,000 use Inland Revenue's mobile web application.
He said the upgrade will allow people to do more tax business online.
