This article discusses planning objectives and an alternative approach to income tax and goods and services tax (GST), and then goes on to evaluate the audit risks for e-commerce. It then summarises the tax treatment of Internet transactions in the United States and Sweden. This includes cyberspace and the virtual worlds, and audit and discovery technologies such as Xenon and ECEyes. The final section also considers the necessary public and professional education, and the need to be proactive in finding methods of stemming the loss of tax revenue by the use of the Internet. The article also comments on how the need for tax revenue to meet the future demands of government expenditure relates to increased monitoring of new forms of internet business transactions, and concludes by examining the planning options available to the New Zealand tax authorities, in order to meet the changing demands of the Internet and e-commerce.