Due to the COVID pandemic, the Inland Revenue Department (IRD) has been taking a much more relaxed approach to outstanding tax debt – but now IRD is ready to crack down. Since the start of July, the IRD have stepped up their efforts to pursue outstanding amounts from taxpayers who owe tax.
PAYE and KiwiSaver payments will be the first priority
The amount of outstanding PAYE and employee KiwiSaver payments have doubled, and overdue GST has tripled, over the past five years. This is obviously a major problem, particularly the KiwiSaver payments, because if these remain unpaid the employee is missing out on compounding gains that contribute to their retirement savings. It’s probably no surprise, then, to hear that the first priority for the IRD, when it comes to chasing debt, will be businesses that have failed to pay their employee deductions.
If, for any reason, you think you might be short on paying PAYE, get in touch with us immediately. We can work with IRD and find solutions to help you – the sooner we start, the better, and the more effectively we can minimise any penalties.
Other areas of focus for the IRD
Over the past year, IRD has also been taking a tough approach to some other specific types of tax concerns:
- High earners who think they might be able to avoid paying the new 39% top tax rate using companies and trusts
- Ute owners who avoid paying Fringe Benefit Tax
- Real Estate agents overstating their expenses or under-reporting their income
- GST on land purchases by developers
- Phoenix companies that are shut down and restarted to avoid tax debts
If you owe tax, don’t bury your head in the sand
We work hard to make sure our clients understand their tax obligations, but if you do have any questions, please let us know. The people at Inland Revenue can be very understanding and helpful, but they don’t have the opportunity to help if you simply bury your head in the sand and hope the problem will go away. Such an approach often compounds the problem. It’s best if you can be proactive and engage with Inland Revenue about the problem. Don’t let your tax debt get out of hand – we’re here to support you and work on your behalf with IRD to help your tax get paid. This is just one of the areas in which we can help your business to succeed.
This publication has been provided as general information associated with the topics covered. It is not intended to be specific advice. We strongly recommend readers seek independent advice from a suitably qualified professional adviser prior to acting in relation to any of the matters discussed in this publication. No person or entity involved in this publication accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation, or omission, whether negligent or otherwise, contained in this publication.