Why do tax dates catch good businesses out?
Tax is calculated on what you earned, but it’s due on a calendar — and the calendar doesn’t care about your season. A tourism business that earns most of its income over summer can still face a provisional tax instalment in a quiet month. A builder’s GST return can fall due before the customer pays the invoice that generated the GST. A business that has just grown fast may face a bigger terminal tax bill than it planned for.
None of that means the business is failing. It means the cash and the due date are out of step.
What does paying late actually cost?
Inland Revenue’s late payment penalties apply in stages:
- 1% of the unpaid tax the day after the due date.
- A further 4% on the seventh day after the due date, on the remaining tax plus penalties.
- Interest on overdue amounts.
IRD may offer a grace period if it’s your first late payment in two years, and it can agree instalment arrangements for debt you can’t pay in full. But penalties and interest are real costs, and a tax debt that builds up also shows up when lenders or suppliers assess you.
Two ways a facility helps
Timing gaps: a line of credit
If you know the tax money is coming — the invoices are out, the season is about to start — a line of credit lets you pay IRD on the due date and repay the draw when your customers pay you. It’s usually the tidiest option for businesses trading six months or more with regular bank statement history.
Existing debt: a property-secured loan
If IRD debt has already built up across several periods, a lump sum is often cleaner. A property-secured top-up of $20,000 to $1m can refinance or pay out IRD debt, secured on New Zealand property you or a supporting party already own. No financials or tax returns are needed for the initial assessment, and bad credit or arrears are considered case by case.
Key IRD dates to plan around
For a business with a 31 March balance date, the main dates are:
| Tax | Usual due dates |
|---|---|
| Provisional tax (standard or estimation option) | 28 August, 15 January, 7 May |
| Provisional tax (ratio option, or AIM for two- or six-monthly GST filers) | 28 June, 28 August, 28 October, 15 January, 28 February, 7 May |
| GST | The 28th of the month after the period ends — except 15 January for November periods and 7 May for March periods |
| PAYE | Depends on your payroll size and filing frequency — check myIR |
Source: IRD, payment dates for provisional tax. If your balance date is different, log in to myIR to see yours.
Instalment arrangement or funding?
IRD’s instalment arrangements can be applied for in myIR, and interest on the overdue amount is included in the instalments. For some businesses that’s the right answer. Funding tends to suit when:
- You want the debt cleared in one step so it no longer affects your standing.
- The arrangement IRD will accept is tighter than your cash flow can comfortably meet.
- You’re consolidating tax debt with other short-term debts into one repayment.
- You’re about to apply for other finance and want a clean position first.
Your accountant is the best person to compare the two for your circumstances.
Preventing the next squeeze
Once the immediate problem is solved, it’s worth building a system: a separate tax account, a regular transfer of a set share of every deposit, and a cash flow plan that marks tax dates in red. Our guides to provisional tax for seasonal businesses and GST timing go into detail.
Pricing
Every facility is priced on your individual circumstances. We don’t publish rates, and we look for the sharpest option available for your situation.
Get tax off your mind
Start the 60-second enquiry and tell us whether it’s an upcoming payment or an existing balance. It’s free, it doesn’t affect your credit score, and a lending specialist will call you back.