Quick answer
A loan to pay IRD clears overdue GST, PAYE or income tax in one payment, stopping further late payment penalties from building on that debt. New Zealand lenders consider IRD debt case by case, either unsecured for smaller amounts or against property for larger ones. With the IRD statement and bank statements ready, the arrears can often be paid within 24 hours of applying.
Key points
- Clears the arrears in one go and stops late payment penalties on that amount.
- Compare it honestly with an Inland Revenue instalment arrangement.
- Lenders want the full IRD balance and a plan to stay current on new tax.
- Property security is common for larger tax debts.
- Unsecured
- Typically $5,000 to $500,000
- With property
- $20,000 to $5,000,000
- Key document
- Current IRD statement of account
- Speed
- Often within 24 hours
Tax debt has a way of growing quietly and then very loudly. One missed GST payment becomes two, PAYE falls behind during a tough month, and before long there are penalties on top of penalties and a letter from Inland Revenue that can’t be ignored. Clearing the debt in one move is often the fastest way to stop the bleeding and get back to running the business.
Why clear IRD debt with a loan?
A loan swaps a fast-growing, enforceable debt for a planned one. The main benefits:
- Penalties stop building on the cleared amount. IRD’s late payment penalties are 1% the day after the due date and a further 4% on the seventh day after. Use-of-money interest also runs on unpaid tax.
- Enforcement risk falls. IRD can issue deduction notices to your bank and, for larger company debts, report the debt to credit reporting agencies.
- Your bank relationship is protected. Many banks won’t lend while IRD arrears exist; clearing them can reopen that door.
Loan or instalment arrangement — which is better?
Inland Revenue offers instalment arrangements, applied for in myIR. IRD says regular agreed payments reduce what you pay because you’ll pay fewer penalties — but paying in instalments without an agreed arrangement may still attract penalties and interest at the full rate.
| Instalment arrangement | Loan to pay IRD | |
|---|---|---|
| Speed | Depends on IRD’s assessment | Often within 24 hours |
| Late payment penalties | Generally stop while the arrangement is kept | Stop on the amount paid off |
| Use-of-money interest | Continues | Cleared with the debt |
| Must stay current on new tax | Yes, or the arrangement can be cancelled | Yes — lenders will check |
| Credit reporting risk | Reduced while arranged | Debt removed |
| Cost | Penalties and interest | Loan costs in dollars |
Neither is always right. For a small debt and steady trading, an arrangement may be cheaper. For a larger debt, an imminent enforcement step, or when the bank needs a clean slate, a loan is often the better tool. Our guide to what paying IRD late really costs works through the numbers.
How fast can IRD debt be cleared?
The main documents are a current IRD statement of account (from myIR), photo ID and six months of business bank statements. With those ready, our aim of funding within 24 hours of your first application is realistic. Unsecured amounts can move fastest; property-secured amounts from $20k to $250k are possible the same day, and larger amounts are possible within 24–48 hours.
If a deduction notice has been issued or a deadline is approaching, start your application immediately and mention the date in the purpose field.
What will a lender want to see?
- The full IRD balance, broken down by tax type — GST, PAYE, income tax, provisional tax.
- Why it built up — a slow season, a bad debt, rapid growth, a bookkeeping gap.
- Returns filed or a plan to file — unfiled returns are a red flag because the true debt is unknown.
- Evidence you can stay current — new GST and PAYE being paid on time.
- Security or strong trading — property for larger amounts, steady deposits for smaller ones.
An illustrative example: a Hamilton transport company owes $140,000 across GST and PAYE after a major customer paid four months late. That customer has now paid, but the cash went into fuel and wages. The bank won’t lend while the debt exists. A second mortgage over the director’s home pays IRD directly at settlement; the company then refinances to its bank once two clean GST periods are on record. (Illustrative only.)
What about PAYE debt specifically?
PAYE is treated seriously because it’s money deducted from employees’ wages. Inland Revenue has said publicly that failing to pay employee deductions is an offence. If PAYE is part of your arrears, prioritise it and tell us — lenders understand that clearing PAYE quickly is in everyone’s interest.
How do I make sure it doesn’t happen again?
- Set aside GST and PAYE in a separate account as income arrives.
- Map your tax dates — see our 2026–27 tax calendar.
- Consider a line of credit as a buffer for future tax dates.
- Talk to IRD early if a payment will be late; options are better before the due date.
What if returns haven’t been filed?
Unfiled returns are one of the biggest obstacles to funding tax debt quickly, because nobody — not IRD, not the lender, not you — knows the true amount owed. If returns are outstanding, ask your accountant to file them as a priority, or at least prepare figures you can share. A lender can then fund the real number, not an estimate that may grow after settlement.
Can I clear IRD debt for a company that’s struggling?
Lenders will want to see that clearing the debt fixes the problem rather than delays it. If the business is still losing money each month, a loan to pay IRD may only replace one creditor with another. In that situation, talk to your accountant about the wider picture first. Where the debt came from a one-off event — a bad debtor, a slow season, rapid growth — and trading is now healthy, funding is usually a sensible reset.
Clear the debt, get back to business
If IRD arrears are holding your business back, clearing them in one payment can be done within a day. See whether you qualify in about 60 seconds. There’s no credit check to ask the question, your details won’t be shopped to a long list of lenders, and a real person who understands tax debt will call you. Please give the full IRD balance and any letters you’ve received on the form — exact figures let us move at full speed.
Frequently asked questions
Is it better to borrow or set up an instalment arrangement?
It depends on the size of the debt, how long you'd need to repay IRD, and your other pressures. Instalment arrangements stop late payment penalties while kept, but use-of-money interest continues. A loan clears the debt at once and can be cleaner if IRD enforcement has started. Compare the total dollar cost of each.
Will lenders fund a company that owes IRD?
Many will, case by case. They'll want the exact balance, the reason it built up and evidence the business can stay current with new GST and PAYE.
Can the loan be paid straight to IRD?
Often yes. Paying IRD directly at settlement is common and gives the lender confidence the funds are used as intended.
What penalties apply to late tax?
Inland Revenue charges a 1% late payment penalty the day after the due date and a further 4% on the seventh day, with use-of-money interest on top. The exact rules differ by tax type.
Can IRD take money from my bank account?
Yes. Under section 157 of the Tax Administration Act 1994, IRD can issue a deduction notice to your bank. See our page on deduction notices for what to do fast.