IRD and use of money interest

IRD charges Use of Money Interest on amounts outstanding to them. 

Essentially, IRD does not want to be treated like a bank and would like to be paid on time.

If you cannot pay on time, they penalise you with a severely high interest rate, far in excess of the reserve bank rate. 

With all the recent reserve bank interest rates rises, IRD are now charging a whopping 10.91% interest on amounts owing to them. 

So, it’s a good reminder that you should always pay any amounts owed to the IRD on time. Please note that interest can be charged on all IRD payments due, from GST, terminal tax, and provisional tax.  Please be aware that if you have under-estimated provisional tax during the year and/or exceeded the safe harbour threshold, IRD will charge you interest for not paying enough tax to them in a timely manner. 

We will always send reminders to advise when there are amounts owing but we don’t always get notified by IRD when there is an amount due or when a payment has been made late, so the onus is on you to also keep track of what is due and when.  We suggest setting up diary or calendar reminders on either your phone, computer, or on paper.

It is also a great idea to get your tax returns and annual accounts information to us as soon as possible so that we can let you know your tax obligations (if any!) sooner rather than later.

Please, however do let us know if you are unable to make a payment on time due to extenuating circumstances, e.g., ill health, family bereavement, etc., and we can contact the IRD to set up a payment arrangement or try to get any late payment interest mitigated.  We also can look at Tax Pooling options to reduce IRD penalties.