The Government took a massive hit to its books in January, with figures for the first seven months of the financial year showing its operating balance had moved $394 million into deficit.
It was the first time in almost 15 years the Government's books had plunged into the red.
But Inland Revenue officials yesterday revealed they had failed to take into account $600 million in provisional tax.
The revised accounts put the Government's operating balance back in black to the tune of $200 million.
Finance Minister Michael Cullen said the commissioner of Inland Revenue and the head of Treasury had apologised to him over what was a ‘‘simple mistake''.
‘‘They used an incorrect forecasting figure and that flowed through. It's the classic case of where you get one thing wrong right at the start, you simply repeat that all the way through and it flows through into the final outcome,'' he said.
Dr Cullen acknowledged he had been concerned over what had initially appeared to be a $700 million drop in forecast revenue - suggesting the economy was slowing faster than anyone had expected.
The revised accounts gave him slightly more headroom for his May budget.
‘‘What it does mean is we're not seeing tax revenue falling away at the rate it was and you will recollect there were not very good explanations for it at the time,'' he said.
The overall slump in the January accounts was largely due to a sharp dip in global financial markets, which had led to a $2.5b hit on investments held by the Cullen Super Fund, ACC and the Earthquake Commission.
The Government also took a $1b paper loss from revalued ACC liabilities, largely due to a revised inflation forecast.
Dr Cullen said last month the crown finances were entering a ‘‘period of quite considerable uncertainty'', which might mean pushing out additional phases of a multi-year rolling tax cut programme.
The first stage of tax cuts would be unlikely to be affected, he said.
Dr Cullen later said in a statement the Inland Revenue error was ‘‘serious'' and ‘‘unacceptable''.
He said Treasury and IRD officials were investigating the cause of the mistake and would report back to him and Revenue Minister Peter Dunne.
The upward swing in its books would not alter the Government's dedication to responsible fiscal management.
Mr Dunne said despite the error he was still happy with the overall performance of his department.
‘‘I am confident the commissioner Bob Russell will be doing everything possible to ensure it does not happen again".
