Don’t be blasé about tax debt
IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.
When it comes to paying bills, we often tend to be blasé and put our financial responsibilities into the too hard basket. Ignoring debt is the easy option at the time but eventually things catch up with you. When it comes to paying tax, it is even more important to stay on top of your obligations to avoid potential tax debt.
So what happens if I do get behind? You should try to avoid getting to this point, but it is likely the IRD will contact you if you miss your payments.
In most scenarios, the tax debt will result in the following charges:
- late filing penalties and interest
- late payment penalties
- non-payment penalties
If you do receive a letter from the IRD, it pays to act quickly. There may be a variety of payback options available to you. If you want to know more, call us and we can work with you to get back in the black.
Also, it is important that your FILE your tax returns ON TIME, even if you can’t pay the bill. There are penalties for non-payment and you can result in default assessments which become permanent if not dealt with.
As director of a company, you can be held personally liable for the tax debt of your company. The IRD can also take action to shut you down if they believe that allowing your situation to continue is not in the best interest of the country (contrary to the popular myth that the IRD would rather have you trading).
If you are worried about your tax debt we can help you sort out an arrangement with the IRD or advise you on next steps.