GRA Blogs

Articles by Anthony Strevens

IRD disclosing unpaid tax

AUTHOR: Anthony Strevens

POSTED: 13 June 2017

The IRD have introduced new regulations that allow the Commissioner to disclose information about a taxpayer’s tax debts to approved credit reporting agencies if certain preconditions are met. (These new regulations are found in section 85N of the Tax Administration Act.)

One of these preconditions is that the amount of the taxpayer’s reportable unpaid tax must be greater than the prescribed amount of $150,000, or the debt must overdue by more than a year and is more than 30% of the taxpayer’s gross income. Other conditions include that the Commissioner must have made reasonable efforts to recover the amount, and must have formally notified the taxpayer.

Before the new rule was introduced on April 1 2017, the IRD was obliged to keep information about a taxpayer’s debt secret. The IRD’s reasoning behind changing this rule was that it will benefit both the Crown and the taxpayer’s potential creditors.

• It will benefit the Crown because taxpayers would not want their information disclosed to creditors, so would be more likely to pay their tax bills.

• It will benefit the people taxpayers do business with, as they will be able to find out about any outstanding debt with IRD before entering into commercial transactions. A large debt with IRD would represent increased risk for a business entering into a commercial arrangement, so it is of benefit for it to be disclosed.

Any disclosure of debt may significantly affect your ability to borrow money, and even if you can, what interest rate will the bank make you pay? Remember also that if the IRD were to disclose your debt, it would stay on your credit record for at least five years. Therefore, it is very important to deal with it before this happens.

If you are concerned that your credit rating is at risk of being damaged because you have outstanding debt with IRD, talk to us at GRA. We are very experienced at negotiating on behalf of our clients, and it is far better to be upfront and come to an arrangement than to bury you head in the sand and have your information disclosed to a credit agency.

Request a Meeting

Anthony Strevens
Business Advisory Director

09 522-7955

[email protected]

© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

Comments

Testimonials

Property School gave me the motivation to take the next step because I've learnt a lot and feel we are on the right path. It really helped to look at examples to show what can be done. The presenters were excellent, high energy, enthusiastic, lots of good quality information. - Amanda C, April 2019

Seminars and workshops for property investors, business owners and anyone seeking to create and protect their wealth.

View all our upcoming events

Learn More

Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.

We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.

Learn More