Tax Payment Changes - it's all about timing

Posted by Andrew on July 23, 2014

On October 1st 2014, New Zealand's Inland Revenue Department will introduce changes to when they need to receive IRD payments. This affects all payments including GST, RWT, PAYE & Kiwisaver Employer Contributions.  

The current situation allows all payments to be posted on or before the due date. So long as any cheque was post marked with the due date or earlier, IRD were happy - and you could stretch out your own cashflow for an extra few days while NZ Post worked their delivery magic. Having a due date fall on the weekend was even better because you got an extra day or two. The new rules mean that IRD must receive any posted IRD payment and returns on or before the due date. 

In the event a tax payment due date falls on a weekend or public holiday, the IRD will accept a payment as being in time if it is received either at an IRD office or at an IRD postal address on the next working day. When it comes to electronic payments, they will be accepted as being in time when they are credited into an IRD account on or before the next working day. If being done electronically, payment that evening will still be accepted by IRD as being on the due date.

It is worth noting that every provincial anniversary day is to be treated as a working day, regardless of where a taxpayer lives. So if a due date falls on one of the provincial anniversary days, then any tax payment must be received by the IRD on or before that day if it is to be accepted as being received in time.

IRD have been pushing for sometime to have businesses complete their IRD requirements online through myIR and online banking - currently about 70% do so. The new payment rules may force those still holding out against technology to change to online systems.

The changes outlined above may impact significantly on business cashflow, particularly for SME's who rely on payments by 20th of the month for example. If you are unsure how this may affect you, we strongly suggest you contact your company accountant. Failure to adhere to the IRD's new payment timelines may attract late payment fines, penalties and Use of Money Interest.