Robyn Walker: Deloitte Tax Partner on over half a million Kiwis owing the IRD with tax debt growing to $9.4 billion

Tax debt has surged by billions since Covid, with more than half a million New Zealanders now owing Inland Revenue. 

A report dating to March shows we collectively owe $9.4 billion, up from $5.8 billion in June 2023. 

The increase is thought to be linked to the Government's focus on keeping businesses afloat during Covid. 

Deloitte tax partner Robyn Walker told Ryan Bridge only $6.2 billion of that is actual tax. 

She says the rest of it is interest and penalties, which are adding to the debt. 

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Episode Transcript

Speaker 1 (00:00):
Half a million kiwis now in debt to the IRD
total kei we debt now nine point four billion, that's
up from six billion and twenty twenty three. Now sixty
five percent of that outstanding debt is for SMEETH, which
is a worry. Robin Walker, Deloitte Tax partner with me
this morning. Robin, good morning, good morning. Is this a
COVID hangover the size of it?

Speaker 2 (00:22):
Yeah, I think that's definitely the case. You can see
the numbers. There's reporting from about twenty twenty and from
about twenty twenty three the debt numbers really start ballooning.
And during those years inland revenue were directed to focus
on COVID, put out those small business cash flow loans,
do the COVID support payments, the resurgence payments and so on.

(00:44):
That's what they were focusing on, rather than collecting debt
as soon as it was outstanding.

Speaker 1 (00:49):
And when you're not collecting the debt it tends to grow. IID.
You could argue a bit softly, softly and now going
a bit more hardball, what are you seeing.

Speaker 2 (00:59):
Yeah, definitely the focus on it, and that's come direct
from the government. They're saying you've got to go out
and collect this money. You want to collect your debt
is while it's fresh, right. So when we look at
the statistics, ninety five percent of people pay all of
their tax on time, and within six months, ninety seven
point six percent of the tax is collected, So it

(01:19):
is it is a small fraction, but it's significant when
it's left uncollected over a significant period of time. So
of the nine point four billion dollars that you mentioned,
six point two million is the actual tax and the
rest of it is interest in penalties. So you've got
over three billion dollars of interest in penalties which are

(01:40):
just adding to that and making it harder to repay
that debt.

Speaker 1 (01:45):
When sixty sixty two percent of the debt that's outstanding
is collectible, what do they mean by that? Does that
just mean that that's the bit that they can likely
get back minus though the interest and penalties you're talking about.

Speaker 2 (01:59):
Yeah, So it's look at how old is the debt
and what is the type of debt? Is it debt
that is subject to a dispute. Is it a company
that's going through a liquidation process or something is stopping
them able to collect the debt immediately? They don't write
off the debt until obviously there's absolutely no chance. So

(02:21):
that's kind of like a bit of an accounting thing
to just say, well, what do we think we will
actually be collecting?

Speaker 1 (02:28):
All right, Robin, good to have you on the show.
This morning is always have a great day, Robin Walker,
Deloitte Tax Partner. For more from Early Edition with Ryan Bridge,
listen live to News Talks it be from five am weekdays,
or follow the podcast on iHeartRadio.