IRD Cracking Down on Compliance

The IRD has ramped up its enforcement efforts across a range of tax-related issues. As the tax landscape evolves, the IRD is taking a stricter approach to ensure compliance. From trusts to student loans here's a breakdown of just some of the areas under closer scrutiny.

1. Income Tax Changes for Trusts

From April 2024,  the tax rate applying to trustee income increased from 33% to 39%. The Government’s intention is to align the trustee tax rate with the top personal tax rate.

To prevent over-taxation, exceptions apply, including for trustee income under $10,000, deceased estates, trusts for disabled individuals, energy consumer trusts, and legacy superannuation funds, which will remain taxed at 33%.

2. Student Loans for Those Overseas

The IRD is tightening enforcement to ensure New Zealanders living abroad continue to make regular repayments on their student loans. The department has made it clear that living overseas does not absolve individuals from their repayment obligations. The IRD has doubled its team focused on overseas collections, is tracking the boarder movements of the largest debtors, and is putting more effort into recovering debt in Australia and the UK.

3. PAYE Obligations

The IRD is closely monitoring businesses for compliance with PAYE taxes. Companies that fail to withhold or remit PAYE correctly are being targeted. Employers must stay compliant to avoid penalties, interest charges, and legal action.

4. Liquidating Companies with Unpaid Taxes

Earlier this year the IRD intensified its compliance efforts by initiating liquidation applications against companies with unpaid taxes. This aggressive approach aligns with the increased funding allocated to the IRD in the 2024 Budget. Notably, by mid-January, the IRD had applied to liquidate 16 companies. These companies span various industries, including commercial property investment, service stations, hotels, real estate agencies, and restaurants.

We Can Help with Compliance

The government is determined to close loopholes and ensure fairness in the tax system. For businesses and individuals alike, staying informed, maintaining accurate records, and complying with all relevant tax laws are essential to avoid penalties and fines.

If you have any concerns about your compliance, schedule a chat with our team today.