Inland Revenue’s ability to remit interest if a business is late paying its tax because they are adversely affected by COVID-19 has been extended.
Here are some steps to take if you do not think you’ll be able to pay your tax on time:
- Contact Inland Revenue as soon as possible.
- Penalties and interest can be remitted for tax payments due on or after 14 February 2020 up until 24 March 2022 (including provisional tax). This will soon be extended to 7 April 2024.
- The best way for customers to take advantage of this is to set up an instalment arrangement in their myIR account at ird.govt.nz.
- Select the ‘I want to’ link, then ‘Request an instalment arrangement’. Also tick the box to say your business has been affected by COVID-19. Doing this confirms that a customer is letting Inland Revenue know as soon as they reasonably can that they cannot pay on time because they are adversely affected by COVID-19. It also confirms they will pay the original amount as soon as they reasonably can.
- If the schedule of payments proposed is reasonable, it will be accepted automatically.
- To reduce interest charges, the original amount must be paid in full by 7 April 2024. If it is not, the customer will be charged interest for any outstanding amount from the original due date.
- If a customer is not able to set up a reasonable payment plan or keep to the terms of the one they set up, they should discuss this with Inland Revenue. It may be possible to renegotiate the payment terms, delay the start of a payment plan to a later date, or write off a part of the tax.
Inland Revenue may check the customer’s declaration that their business was significantly affected by COVID-19. Businesses should keep records such as bank and credit card statements, management accounts, and debtor and creditor lists.