Falling behind with Inland Revenue is common, especially after a slow season or a period of fast growth. GST collected from customers gets spent on wages. A provisional tax instalment lands in the same week as a big supplier bill. Then penalties and interest start stacking up, and a manageable debt becomes a stressful one.
The earlier you deal with it, the more options you have.
What kinds of IRD debt can be funded
- GST returns that were filed but not paid.
- PAYE and employer deductions — including KiwiSaver employer contributions collected through PAYE.
- Provisional tax instalments that were missed or underpaid.
- Terminal tax — the balance owing after your return is assessed.
- Late payment penalties and interest that have built up on any of the above.
Option 1: an instalment arrangement with IRD
Inland Revenue can agree to let you pay tax debt off over time. It’s worth considering first — contact IRD, explain your situation and propose what you can afford. IRD will generally want your returns up to date and may ask about your finances. Interest continues to accrue while the debt is being repaid.
Our guide to dealing with IRD debt walks through how instalment arrangements work and what IRD usually asks for.
Option 2: clear it with a business loan
A loan can make more sense when:
- IRD won’t agree to terms your cash flow can realistically handle;
- you’d rather have one known repayment than an open-ended arrangement;
- the debt is part of a bigger picture — you also need working capital, equipment or a bridge;
- you want to protect relationships with customers and your bank from IRD recovery action.
Property-secured
With a property-secured business loan from $20,000 up to $1m, IRD debt can be refinanced or paid out. No financials or tax returns are needed for the initial assessment, which matters because tax debt and late returns often go together. Bad credit, defaults and arrears are considered case by case, and funding can happen within 24 hours of approval in some cases.
Unsecured
For businesses usually trading six months or more, an unsecured loan based on turnover and bank statements can clear smaller tax debts. Weaker credit is considered.
Loan vs IRD arrangement: a quick comparison
| IRD instalment arrangement | Business loan | |
|---|---|---|
| Who you owe | Inland Revenue | A lender |
| Returns up to date? | Generally required | Not needed for secured initial assessment |
| Can include other needs? | No | Yes — working capital, equipment etc. |
| Recovery risk if you miss payments | IRD recovery powers | Lender’s contract terms |
| Cost | Ongoing IRD interest | Priced on your individual circumstances |
Stop it happening again
Paying off the debt fixes the past. A system fixes the future:
- Separate tax money. Open a dedicated account and move GST and tax into it every week.
- Know the numbers. Use the GST & provisional tax planner to calculate a weekly set-aside.
- Choose the right provisional tax option. AIM or the ratio option can align payments with actual cash flow — see provisional tax options explained.
- Match GST frequency to your habits. Two-monthly or monthly filing can make GST easier to manage than six-monthly — see our GST filing guide.
Talk to someone today
Send a 60-second enquiry. It’s free and doesn’t affect your credit score. A Loanster lending specialist will call to talk through how much is owed, what else the business needs, and the most sensible way through.