COVID-19: Managing tax payments and cashflow

IRD will have the power to waive interest (UOMI) if those significantly impacted by COVID-19 cannot pay their tax on time. Here’s everything you need to know.

IRD interest write-off - Frequently Asked Questions

From what date will the UOMI concession apply?

IRD will have the discretion to remit UOMI on payments due after 14 February 2020.

To what payments will this UOMI concession apply?

IRD says this concession will apply to all tax payments such as provisional tax, PAYE and GST and other payments (e.g. Working for Families) where UOMI is charged.

Who can apply to receive this UOMI concession?

Anyone impacted by COVID-19 is eligible to apply ahead of an upcoming payment.

Is there certain criteria that must be met?

IRD is still determining the criteria, but says for taxpayers to receive the UOMI concession, they will likely need to prove they have:

  • Seen their revenue drop by at least 30 percent compared to the same time 12 months earlier due to COVID-19; and
  • Exhausted all other options to support themselves financially.

What does a 30 percent reduction in revenue due to COVID-19 mean?

IRD is aligning the UOMI waiver to the tests used by the Ministry of Social Development (MSD) for providing wage subsidies. As per MSD’s guidelines, IRD says taxpayers must have experienced this reduction in revenue between January 2020 and 9 June 2020 to be eligible. That decline can be in actual revenue or predicted revenue (e.g. a motelier sees a reduction in bookings). Businesses must compare one month’s revenue against the same month from the previous year to determine that decline (e.g. March 2020 to March 2019). For businesses operating less than a year, they must compare revenue against a previous month that gives the best estimation of the revenue decline.

For how long will IRD remit UOMI?

Under the current proposal, IRD could remit UOMI for a maximum of two years past the date the policy is enacted. However, the actual length will depend on the circumstances of each business or individual.

Will late payment penalties still apply?

No, IRD has confirmed it will exercise its discretion and remit late payment penalties as well for those who qualify for the UOMI concession.

How do I apply for the UOMI concession?

IRD is still working through the detail and a framework at this stage. Legislation will be introduced in early April. However, it says those wanting to receive the UOMI concession should apply to enter an instalment arrangement in the first instance. This can be done by phoning the department or via myIR. IRD will waive any UOMI they normally charge as part of this arrangement once the bill containing the COVID-19 remission legislation is enacted.

*The information on this page is correct as at 20 March 2020. It is subject to change as IRD is still determining how it will apply the UOMI concession.

Image: Taxation (Kiwsaver, Student Loans, and Remedial Matters) Bill
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How TMNZ can help

For those feeling the impact of COVID-19 who DO NOT meet the criteria to have UOMI waived, TMNZ can help. With interest rates at historical lows, tax pooling is the next best option to manage cashflow and tax obligations during this difficult economic time.

The service can be used to defer payment of 2020 provisional tax until up to June 2021. It also provides an additional 75 days past the terminal tax date to settle any 2019 income tax obligations, without having to worry about late payment penalties and UOMI.

Pay provisional tax

When it suits your business while reducing interest costs and penalties

Reduce risk on overpaid tax

Reduce tax liability risk and potentially earn more interest.

Reduce tax audit costs

And save up to 30% on IRD interest for reassessed tax

Do you work for an accounting firm and manage taxpayer clients?

TMNZ can help give your clients more flexibility around their tax payments

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