Upcoming Tax Payments and potential relief

One of the measures that have been announced to assist businesses through this period of uncertainty relates to upcoming tax payments.

If you have an upcoming tax payment then there is a possibility that you may get remission of penalties and interest on this payment if it is paid late.

New legislation (section 183ABAB of the Tax Administration Act 1994) allows the Commissioner, on application, to remit UOMI that accrues on tax payments that fall due on or after 14 February 2020, when the taxpayer’s ability to make the payment on time has been significantly adversely affected by COVID-19.

Who does this apply to?

The rules around this are quite fluid and there is no guarantee that you will get the penalties and interest remitted, but if you feel that you are going to have difficulty making a tax payment and the following applies then see further information below :

To be significantly adversely affected is:

  • Income or revenue has reduced as a consequence of COVID-19, AND
  • As a result of that reduction unable to pay their taxes in full and on time.

What tax does it apply to?

The relief applies to any tax due on or after the 14th February 2020, (any tax due before this is subject to the old debt remission rules).  This includes PAYE and GST payable after the 14th of February 2020.

How do I apply?

Initially, IRD is asking people to let them know as soon as possible if you feel you cannot make a tax payment on time. This can be before or after the due date.  They are also asking that you lodge the returns (such as employer, GST) even if you are unable to make the payment.

To let them know, you can send a correspondence under MYIR on the IRD website explaining that you are unable to make a tax payment and the reason is due to COVID-19.

They may request further supporting documentation such as:

  • 3 months bank and/or credit card statements
  • Management accounting information
  • List of aged debtors/creditors

Applications will be considered on a case by case basis.

Our recommendation

→ If you can pay the tax then you should pay it. This measure has only been put in place for businesses and individuals who are unable to pay the tax, due to the current COVID-19 situation.

→ If you feel that you will be able to pay the tax payment in full within a reasonable amount of time (say 2 – 3 months) then letting them know will be enough, and payment should be made as soon as you are able.

→ If you feel that you will not have the funds to pay this in full for a significant amount of time then you can apply for an instalment arrangement to repay the tax. Generally, instalment arrangements of up to two years should get approval.

→ On the dashboard of your MYIR, there is a “Request an instalment arrangement” tab which you can click on and it will take you through the process.

If you need any assistance or advice on the above issues please get in touch and we can discuss how we can assist you and the expected cost you will incur.


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