Tax debt is one of the most common reasons New Zealand business owners look for alternative funding, and the pressure has risen. As at 30 June 2025, businesses owed Inland Revenue around $9.3 billion in overdue tax, and IRD-initiated liquidation applications rose sharply, with bank deduction notices increasing too. Budget 2026 added further funding for debt collection. The message is clear: tax arrears are being chased.
What are the options?
There are really two routes, plus a mix of both:
- Agree to pay IRD over time through an instalment arrangement.
- Pay IRD in full using other funding, then repay the lender instead.
- Combine them: pay part now to reduce the arrangement to something manageable.
Option one: an IRD instalment arrangement
Inland Revenue lets businesses pay tax debt in instalments, weekly or fortnightly, arranged through myIR or by contacting IRD. For larger or more complicated debts, IRD may ask for information such as a 12-month cash flow forecast.
It suits you when:
- the debt is modest relative to your cash flow;
- you can realistically meet the instalments and keep current GST and PAYE paid;
- enforcement hasn’t escalated.
Be aware:
- penalties and interest generally continue on the outstanding balance;
- missing an instalment can end the arrangement;
- new tax debt arising during the arrangement causes problems quickly.
Option two: refinance and pay IRD in full
Paying IRD out with a non-bank loan swaps a tax creditor for a commercial one. That can be the better choice when:
- the debt is large or old, and instalments would choke cash flow;
- enforcement action, such as a deduction notice or statutory demand, has started;
- you want a single, predictable repayment rather than a long arrangement;
- you own property with equity and the bank won’t lend for tax.
Through our panel, property-secured business loans can refinance or pay out IRD debt, from $20,000 to $1m. No financials or tax returns are needed for the initial assessment, and bad credit, defaults and arrears are considered case by case. For businesses trading 6+ months, an unsecured loan sized on turnover may also help with smaller amounts.
Which is better for you?
| Factor | Leans to instalment arrangement | Leans to refinancing |
|---|---|---|
| Size of debt | Modest | Large |
| Enforcement | None yet | Started or threatened |
| Cash flow | Can carry instalments plus current tax | Instalments would squeeze trading |
| Property equity | Not needed | Available |
| Preference | Keep costs down | Certainty and one repayment |
There’s no universal answer. Our IRD tax debt guide works through the trade-offs in more detail.
The part people skip: fix the cause
Tax debt is usually a symptom. Common causes are GST collected but spent on operations, PAYE squeezed in a tight month, or provisional tax underestimated after a strong year. Whatever route you choose:
- open a separate account for GST and PAYE and sweep money into it every time you’re paid;
- talk to your accountant about provisional tax options;
- review pricing if margins can’t cover tax.
Talk to IRD, and talk to us
Contact Inland Revenue early. Then, if refinancing looks worth exploring, start a 60-second enquiry with us. A lending specialist will call to discuss whether a property-secured or unsecured loan could clear the debt, and whether it’s the right move compared with an arrangement.