A taxpayer can apply for an instalment arrangement with the IRD if they cannot make a tax payment in full by the due date due to COVID-19. The required IRD return should still be filed in myIR before the due date, so the IRD are able to determine the amount of tax that the instalment arrangement is being applied for before they will approve the arrangement.
Instalment arrangements can be set up for GST, FBT, income tax and resident withholding tax payments. If you have several tax payments due, for example GST and provisional tax to pay, these can be combined in one arrangement. If you require further assistance at a later date there is the ability to renegotiate the terms of the arrangement but you should do this at the earliest opportunity.
Interest and penalties will continue to accrue for the duration of the instalment arrangement. When the arrangement has been completed, IRD will establish if the taxpayer meets the criteria for remission of interest and penalties under the COVID-19 provisions.
To be eligible for remittance of interest and penalties under these provisions, the tax under the arrangement must have:
- been due after 14 February 2020
- taxpayer must have been significantly financially affected by COVID-19
- contacted IRD to request relief before the tax due date
- pay the outstanding tax as soon as possible
If you meet the remittance criteria, the IRD will automatically cancel the interest without the taxpayer having to apply to have it remitted. In determining if the taxpayer has been affected by COVID-19, the IRD will look at all returns filed. In addition to this they may ask for three months bank statements, management accounting information and list of aged creditors or debtors.
The ability of the IRD to remit interest and penalties applies until 25 March 2022.