IRD debt cost calculator
See how penalties and interest add up on unpaid GST, income tax or provisional tax, and what it would take to clear it.
The short answer
IRD charges a 1% late payment penalty the day after tax is due and a further 4% after seven days, plus daily interest on unpaid tax at IRD's current rate. Enter what you owe and IRD's current interest rate to see the cost now and in the months ahead if the debt isn't cleared.
How IRD debt grows
For GST, income tax and provisional tax, the late payment penalty is 1% the day after the due date and a further 4% at the end of day seven, charged on the unpaid tax and penalty. On top of that, IRD charges interest on unpaid tax every day until it's paid. The longer it sits, the bigger it gets, and IRD can also start collection action such as deduction notices on your bank account.
If you can't clear it, applying for an instalment arrangement with IRD can reduce penalties, though interest still runs. Our guide on how to pay IRD tax debt compares an instalment arrangement with a loan, and what happens if you don't pay IRD covers the risks.
Clearing it in one hit
A tax debt loan pays IRD in full so penalties and IRD interest stop, and you repay one lender on a schedule that fits your cash flow. Unsecured options start at $20,000, and a second mortgage can work even when credit is bruised.
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Frequently asked questions
What penalties does IRD charge on late GST or income tax?
For GST, income tax and provisional tax, IRD charges a 1% late payment penalty the day after the due date, then a further 4% at the end of the seventh day on the unpaid tax and penalty. IRD also charges interest on unpaid tax, worked out daily from the day after the due date.
What interest rate does IRD charge?
IRD sets its own interest rate on unpaid tax and changes it from time to time. Check the current rate on the IRD website and enter it in the calculator. IRD interest is not compounded and is deductible for business purposes.
Is a loan cheaper than staying in debt to IRD?
Sometimes. Compare the penalties and interest building on the IRD debt with the full cost of a loan. Clearing IRD debt can also stop collection action, deduction notices and, for larger debts, the risk of your tax debt being reported to credit agencies. Our tax debt loans page explains the options.
Does this cover PAYE?
No. Unpaid PAYE and other employer deductions carry different and heavier penalties, and IRD treats non-payment seriously. If you owe PAYE, see our GST and PAYE arrears page or call us to talk through it.
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