Plenty of us have been there before – the bills come in and they add up to a bigger number than what’s in your bank account. So you have to choose – what gets paid, and what doesn’t. 

This is a common scenario for many businesses, particularly now when costs and revenue are often both heading in the wrong direction. 

When you’re in this situation, the natural temptation is to bump tax down the list. Inland Revenue doesn’t make your products or serve your customers, and paying Inland Revenue doesn’t keep stock on the shelves.

It’s a tough dilemma, but putting off paying your tax is a bad idea, for several reasons. 

The national tax debt is now $9.2 billion and growing. More than half of this is GST and PAYE debt, which is a concern as this money really belongs to Inland Revenue – it’s not tied to a business’ taxable profits, but an incidence of trading and having employees.

Unsurprisingly, Inland Revenue are keen to do something about it, and the government has increased their funding for debt collection.

They’ve got several tools at their disposal too. Inland Revenue are ramping up their use of deduction notices, and they’re getting smarter at finding “hidden” assets that could be used to pay off debt.

A new tool rolling out as well is reporting tax debt to credit reporting agencies. This one has the potential to really hit businesses where it hurts, as it could impact their ability to borrow or enter into supply contracts.

So what should you do if you’re falling behind on tax?

The most important thing is to do something. Inland Revenue are generally very accommodating of any taxpayer who genuinely wants to pay their tax, and will often enter into generous instalment arrangements or negotiate on interest and penalties.

However, they’re much stricter with taxpayers who do nothing. 

This is where we can help. Tax agents like us can negotiate with Inland Revenue for you, discussing options to reduce the amount due and stagger payments over time. 

It’s often easier than you might think, and can really take a load off your mind, so get in touch if you would like to talk through your options. 

Alex Cull

Tax Partner, Greenhawk Chartered Accountants

0800 422 526 | [email protected] | greenhawk.co.nz

91 Sir Tim Wallis Drive, Wānaka