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Articles by Anthony Strevens.

IRD disclosing unpaid tax

AUTHOR: Anthony Strevens
Partner

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
Partner

09 522-7955

[email protected]

© Gilligan Rowe & Associates LP

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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.

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Testimonials

This letter is to express my appreciation for the assistance and encouragement of both Anthony Lipscombe and particularly John Heaslip over the last financial year. The period since activating my trading trust has been one of considerable stress, as well as personal development, as I embarked on this as a relative business neophyte with virtually no awareness of the contemporary requirements of running a business, particularly the financial records aspect. During much of this period I have therefore felt considerable out of my depth. However I have been lucky enough to have had the benefit of the advice and support of John Heaslip in rationalizing what was a fairly chaotic set of records of the first year property trading. I am able to say that John in particular, has been unstinting in his attention to my needs and has done so in a manner which has never alluded to my extremely rudimentary grasp of managing a business, or even of being unable to set out a spread sheet properly. The result of the above guidance is that now, although my trading trust would still not be able to operate without the advice of GRA, I do least feel a sense of satisfaction that I have got to my present point without major disaster and that my property trust does now have some kind of firmer basis for any future activities - Name withheld by request

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