The short answer
A GST debt loan is business finance used to pay overdue GST or PAYE to Inland Revenue in full. It matters most for PAYE, where IRD adds a 10% non-payment penalty each month the deductions stay unpaid. LoansOne arranges unsecured loans and 1st or 2nd mortgages from $20,000 to $500,000, with next-day funding possible.
Why GST and PAYE debt build up so easily
GST and PAYE are the two taxes that most often tip a good Kiwi business into arrears. Neither is really your money. GST at 15% is collected from your customers and PAYE is deducted from your staff’s pay. But both land in your business bank account first, and when a big supplier bill or a slow month arrives, it is easy for that money to get spent on keeping the doors open.
Then the due date rolls around:
- GST is due on the 28th of the month after your taxable period ends. Periods ending 31 March are due by 7 May, and periods ending 30 November by 15 January.
- PAYE is due by the 20th of the following month for small and medium employers. Larger employers, with $500,000 or more in PAYE and ESCT a year, pay twice a month.
Miss one GST payment and the next return lands on top. Miss PAYE and it compounds faster still, because a new month of deductions is due every month. A GST debt loan lets you pay the whole lot in one hit, then put a system in place so it does not happen again.
How do penalties differ on GST and PAYE arrears?
This is where GST and PAYE part ways, and why PAYE should almost always be cleared first.
| GST arrears | PAYE arrears | |
|---|---|---|
| Whose money it is | Collected from customers on IRD’s behalf | Deducted from staff wages, plus KiwiSaver and student loan deductions |
| Late payment penalties | 1% day after due date, 4% on day 7 | 1% day after due date, 4% on day 7 |
| Ongoing monthly penalty | No monthly 1% penalty on GST | 1% monthly penalty applies |
| Extra penalty | None specific | 10% non-payment penalty, repeated monthly, reducing to 5% if paid or under an arrangement |
| Use-of-money interest | Charged daily until paid | Charged daily until paid |
| How IRD views it | Serious, collected firmly | Very serious; Inland Revenue prosecutes non-payment, including directors |
IRD may give a grace period for a first late payment in two years, and it does not charge penalties on $100 or less. Beyond that, the table speaks for itself. A PAYE balance left for a few months can grow far faster than the same amount of GST.
In March 2026 Inland Revenue publicly reminded employers that not paying PAYE is a criminal offence carrying up to five years in prison, and that anyone who aids or conspires in it, such as a director, can be charged. That is the far end of the scale and it is aimed at people who deliberately keep the money. The practical lesson for everyone else is simple: if you owe PAYE, deal with it now.
Which loan works best for GST and PAYE debt?
Most GST and PAYE arrears fall between $20,000 and $200,000, which suits several structures.
Unsecured loan, assessed on bank statements. If you trade daily, such as a café, retailer or service business with steady card takings, an unsecured business loan or cash flow loan is often the cleanest fit. No property is required in most cases, and amounts run from $20,000 to $500,000.
Second mortgage behind the bank. If you own property, a second mortgage can clear GST and PAYE without touching your bank loan. No cash flow or financial records are needed and bad credit is OK, which helps when the arrears themselves have dented your credit file.
Private first mortgage. Where the bank is part of the problem, a fast first mortgage can refinance it and clear IRD in the same settlement.
Not sure which fits? The loan matcher narrows it down, or you can apply in about 30 seconds and let an expert do the matching.
GST debt loan vs IRD instalment arrangement
Inland Revenue offers instalment arrangements, and they are worth a look. IRD says that sticking to an agreed arrangement means you pay fewer penalties, and for PAYE the last 10% non-payment penalty drops to 5% once you enter one. But interest keeps running and is built into your instalments, and if you slip, IRD can restart collection action.
A loan takes a different route. IRD is paid in full on settlement, the tax account is clear, and you repay one lender on agreed terms. Which works out cheaper depends on the size of the debt, how long you would need to repay IRD, and the loan you qualify for. Every LoansOne loan is priced on your individual circumstances, and the team works to get the sharpest rate available for your situation. Put the two side by side with the compare loan offers tool.
For a full comparison across all tax types, see our main IRD debt loan page.
Two scenarios
A Christchurch hospitality group. A two-site café business had a slow autumn after a nearby road closure. It fell behind on two GST periods and three months of PAYE, about $85,000 in total. The owners leased their premises and did not want to involve the family home. An unsecured loan, assessed on 12 months of strong card takings before the roadworks, cleared PAYE and GST together. For more on funding in this sector, see hospitality business loans.
A Tauranga building company. A residential builder had a client go quiet on a final progress payment. The company kept paying its crew but held back PAYE and GST to cover materials. By the time the client paid, IRD was owed around $160,000 and penalties were climbing. The director owned a rental property with good equity, so a second mortgage cleared IRD in full and left the main bank loan alone.
These are illustrative scenarios, not real clients.
How do I stop GST and PAYE arrears happening again?
A loan fixes today’s problem. A few habits stop it coming back:
- Open a separate tax account. Move 15% of GST-inclusive sales and every PAYE deduction across each week. Treat it as untouchable.
- Know your exact GST figure. Use the GST calculator to work out what portion of each invoice belongs to IRD.
- Line up dates. Put the 20th (PAYE) and the 28th (GST) in your calendar, plus 15 January and 7 May.
- Plan for the lumpy months. A line of credit or working capital loan can cover a slow month so tax money stays where it belongs.
- File on time even if you cannot pay. A filed return keeps the debt known and keeps your lending options open.
What if my GST returns are not filed yet?
This is the most common snag, and it is fixable. Lenders need to know the size of the hole before they fill it, so an unfiled GST return or a missing month of payday filing holds everything up. Even if you cannot pay, get the returns in first. Your accountant or bookkeeper can usually turn around overdue GST returns quickly if your records are in order.
Filing also helps with Inland Revenue. A filed return replaces any estimate IRD has made with the real figure, and it shows good faith. Then the loan can be sized to the exact balance in myIR, including penalties and interest to date, so nothing is left hanging once IRD is paid.
If your financial records are behind across the board, not just for GST, our page on low doc business loans explains what lenders accept in place of a full set of accounts. Property-secured 1st or 2nd mortgages need no cash flow or financial records at all.
What you need to apply
- Your current Inland Revenue statement from myIR, showing GST and PAYE balances
- Three to six months of business bank statements
- Photo ID for owners or directors
- Property address and current lender, if you would like a secured option
Your enquiry is free, takes about 30 seconds to start and does not mark your credit file. An expert reviews every application, then a matched lender makes contact. Your file is not sent to dozens of lenders.
Next step
If PAYE is in the mix, every month counts. Clearing GST and PAYE now stops the penalties and gets IRD off your list of worries. Start your application online or call 09-888 5252 to talk it through with the team.
