Talk to us, says Commissioner of Inland Revenue

MEDIA RELEASE

18 March 2009

Talk to us, says Commissioner of Inland Revenue

The Commissioner of Inland Revenue, Robert Russell, is urging customers finding it difficult to pay their taxes in the current economic climate to contact the department at the earliest opportunity.

“We understand that economic conditions are tough for many people and businesses at the moment. Many people may be OK now, but concerned that their finances will get worse in future and they will have trouble meeting their obligations,’’ he said.

“However, it’s vital that they get in touch with us and let us know that they are having problems, preferably before the date payments are due. Missed tax payments attract penalties and interest.

“If people get in touch with us early, there are a number of things we can do to help them, depending on the individual situation.’’

Tax payment by instalment was one option, he said. “At the end of December, we had $902 million being paid under instalment arrangements.’’ Such arrangements can be renegotiated if people’s situations worsen.

“Even if customers do choose to talk to us after their due dates, better late than never. A voluntary disclosure now is preferable to facing far greater tax problems at a later date, and will reduce further penalties, ’’ he said.

Customers who enter into instalment arrangements before the due date will pay a one-off penalty of one per cent of tax owed, and will pay use-of-money interest but they will avoid the penalties they could face if they just ignored their tax obligations.

Mr Russell said that it was important to comply with tax requirements. “Debt tends to rise and tax gets pushed down the list of priorities by people and businesses. Inland Revenue has a statutory obligation to collect the maximum revenue over time which is required to pay for health, schools, social services and a number of other areas.’’

He noted that customers with reduced income may find themselves eligible for Working for Families Tax Credits. Other people may be eligible for the Independent Earner Tax Credit which will be available from 1 April.

Options are also available in the case of Child Support and Student Loans repayments, and people unable to meet their KiwiSaver obligations can take a contributions holiday after being in the scheme for a year. Prior to that, they can apply for a financial hardship holiday.

Mr Russell said in the case of tax debt, the department only takes liquidation or bankruptcy proceedings as an absolute last resort.

“Such actions are only undertaken when all other efforts to recover the money owing has failed. Liquidation is always preceded by multiple attempts by Inland Revenue, often over several years, to negotiate with the taxpayer.’’

“The sooner people contact us,’’ Mr Russell said, “the sooner we can discuss the options available to assist them to meet their repayment obligations.’’

“We want to help people get their affairs in order to avoid worse problems down the track.’’

For more information, customers can go to www.ird.govt.nz/how-to/debt/ or call 0800 227 771 for individual taxpayers, or 0800 377 771 for employers.

People can check their entitlements to Working for Families Tax Credit using the online calculator at www.ird.govt.nz

Information about the Independent Earner Tax Credit, coming into effect on 1 April, is available at www.ird.govt.nz/ietc

ENDS

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