Frequently Asked Questions
What is Tax Debt Management?
Tax debt management is the process of managing and resolving outstanding tax debts with Inland Revenue. It applies to both individuals and businesses in New Zealand and Zealand, and taxpayers may have different options depending on their circumstances. This includes reviewing your tax obligations, understanding the total amount owed, and exploring solutions such as payment plans, instalment arrangements, or hardship relief. Negotiating with IRD is often part of the process, and it’s important to be proactive and upfront when communicating with tax authorities to achieve the best possible outcome.
What if I can’t afford to pay my tax debt?
If you can’t afford to pay your tax debt, start by reviewing the total amount owed, including any penalties and interest. Consider whether selling assets could help pay off your debts. You may be able to apply for an instalment arrangement to pay your tax debts over a period of time, but it’s important to pay by the due date to avoid additional fees and penalties. The consequences of not addressing tax debt promptly can include penalties, interest charges, and potential legal action. If you’re unsure about your options, seek professional support to assist with managing your obligations and negotiating with IRD on your behalf.
How long does it take to resolve tax debt?
The time it takes to resolve tax debt depends on your situation, the total amount owed, and the process involved. There is often a negotiation period with IRD, and it’s important to stay ahead by communicating with them if you anticipate payment difficulties. Being proactive and honest can help speed up the process and reduce stress.
Can I apply for hardship relief if I owe tax due to an IRD Audit?
Yes, you can apply for hardship relief if you owe tax due to an IRD audit. Serious hardship is a qualifying circumstance for a write off, and in some cases, IRD may accept a reduced settlement amount. A compromise agreement may allow taxpayers to negotiate a reduced amount that the Inland Revenue will accept as full settlement. The process involves demonstrating your financial situation and negotiating with IRD to achieve a manageable outcome. However, you are not eligible for a tax write off under the financial hardship provisions.
I don’t have any tax debt. Can you still help me?
Absolutely. I can assist with managing your future tax obligations, including income tax, GST, and PAYE. It’s important to set aside money based on your income to cover these obligations and avoid future tax debts. I can also help with financial planning, so you stay ahead and avoid surprises down the line.
I can also prepare your annual accounts and tax returns for your small business on a yearly basis, prepare your GST returns, prepare cashflow forecasts, management accounts and prepare and file PAYE Returns.
What are instalment arrangements and how do they work?
An instalment arrangement allows taxpayers to pay their tax debts over time in manageable payments, rather than in a lump sum. To apply, you need to contact IRD and provide details about your financial situation. The process may involve submitting supporting documents and agreeing to a payment schedule. Setting up direct debit payments can make ongoing instalment handling easier. Keep in mind that fees, penalties, and interest may apply if you miss a payment or don’t pay by the due date. Instalment arrangements are available to both individuals and businesses in New Zealand and can help reduce stress by spreading payments over a set period.
What types of tax debts can be managed?
I can help manage a range of tax debts, including income tax, GST, PAYE, and student loan debt. It’s important to review all outstanding debts, including the total amount owed, penalties, and interest, to understand your situation and explore the best options for managing or clearing your tax debts. Financial assistance options, such as bank loans, may help manage tax debt, but have associated costs and benefits.
What is the role of tax lawyers and accountants in managing tax debts?
Tax lawyers and accountants play a crucial role in managing tax debts. They can assist you by reviewing your obligations, negotiating with IRD on your behalf, and helping to set up instalment arrangements or seek a write off in cases of serious hardship. Their expertise can help you achieve the best possible outcome, whether you are an individual or a business, and ensure you remain compliant with New Zealand tax laws
How can I deal with the stress of tax debts?
Dealing with tax debts can cause significant stress for both individuals and businesses. Support is available— I can assist you in managing your obligations, negotiating with IRD, and exploring all available options. Being proactive and seeking help if you are unsure about your tax situation can make the process less overwhelming and help you regain control of your finances.
If you have more questions or are unsure about your tax obligations, debts, or the process for managing them in New Zealand, don’t hesitate to contact me for support. I'm here to assist you in dealing with the IRD, managing your tax debts, and planning for a secure financial future.