Avoid penalties, stress, and costly errors with these practical tips for dealing with Inland Revenue in New Zealand.
Whether you’re a business owner, contractor, or wage earner, dealing with Inland Revenue (IRD) is a part of life in New Zealand. Unfortunately, even well-meaning individuals and businesses make mistakes that can lead to fines, delays, or audits.
Here are 5 of the most common IRD mistakes – and how you can avoid them.
1. Missing Tax Deadlines
One of the most frequent (and avoidable) mistakes is failing to meet IRD deadlines. This can result in late payment penalties and interest charges, which add up fast.
Common missed deadlines:
- Provisional tax dates
- GST filing dates
- PAYE schedules
- Annual income tax returns
How to avoid it:
- Use a tax calendar or set reminders on your phone.
- Work with your accountant to ensure returns and payments are filed on time, every time.
2. Incorrect IRD Numbers
This might sound basic, but filing under the wrong IRD number is surprisingly common.
Why it matters:
- It can cause mismatched records, refund delays, or even tax being applied incorrectly.
- In payroll, incorrect IRD numbers can delay your employees’ tax records and KiwiSaver contributions.
How to avoid it:
- Always double-check IRD numbers when onboarding staff or submitting returns.
- Use myIR to verify existing numbers and keep records up to date.
3. Failing to Register for the Right Taxes
If you’re self-employed or running a business, you may need to register for:
- GST (if your turnover exceeds $60,000 in a 12-month period)
- PAYE (if you have employees)
Common mistake: Assuming GST registration is optional or waiting too long to register.
How to avoid it:
- Review your income regularly and know the thresholds.
- Talk to your accountant about your obligations if you’re expanding your business or changing your structure.
4. Underestimating Provisional Tax
If your residual income tax (RIT) is more than $5,000, you may be required to pay provisional tax in instalments. Many businesses underestimate their tax bill, leading to interest charges or a big lump-sum surprise at the end of the year.
How to avoid it:
- Keep your records current and base your estimates on accurate data.
- Ask your accountant to review your position before each payment date.
5. Ignoring IRD Correspondence
IRD sends important notifications through myIR and by mail. Ignoring them can lead to missed deadlines, overlooked tax debts, or even enforcement action.
Why people ignore IRD letters:
- They assume it’s a mistake or junk mail.
- They feel overwhelmed or unsure what the letter means.
How to avoid it:
- Log into myIR regularly and ensure your email/mobile is updated.
- If you receive a letter you don’t understand, send it to your accountant ASAP.
- Never delay—most IRD issues are easier to resolve early on.
Tax mistakes can be costly—but they’re usually preventable with the right systems and support in place. At Cornish Accounting Limited, we help individuals and businesses across New Zealand stay on the right side of IRD by offering proactive advice, accurate recordkeeping, and tailored tax planning. Get in touch with us today — we’re here to make your finances easier and IRD dealings stress-free.