Inland Revenue's (IR) debt-pilot programme continues to generate strong interest among accountants looking for practical ways to help clients resolve historic 2023 and/2024 income tax debt.
From existing payment arrangements and GST or PAYE arrears, to potential savings, application success rates and identifying eligible clients, we're receiving plenty of questions from firms wanting to better understand how the programme works.
Here are some of the key things accountants need to know.
Yes.
One of the most common misconceptions is that clients already paying off tax debt through an Inland Revenue instalment arrangement are automatically excluded from the programme.
That's not the case.
Clients with an existing IR instalment arrangement for 2023 and/or 2024 income tax debt can still qualify for the programme, provided they meet the eligibility criteria.
In many cases, participating in the programme can reduce the overall cost of settling that debt, as Tax Traders' rates are generally lower than IR's use-of-money interest rates and late payment penalties can be eliminated altogether.
This is another area where there can be confusion.
The standard eligibility criteria require taxpayers to have no overdue GST or employment-related taxes.
However, where those liabilities are already being managed under a payment arrangement with IR, the Commissioner has discretion to allow the taxpayer to enter the programme.
In other words, GST or PAYE arrears do not automatically prevent a client from qualifying.
This is an important distinction. Some clients who may initially appear ineligible could still gain access to the programme and the benefits that come with it.
The programme is continuing to gain momentum, and we're seeing a growing level of engagement from both accountants and taxpayers.
Encouragingly, a high proportion of arrangements entered into and submitted through Tax Traders are being approved by IR.
One area that can cause confusion is the programme deadlines.
Eligible taxpayers who wish to participate in the programme must enter into a payment arrangement with Tax Traders by 1 October 2026. This can be done online via our portal dashboard.
However, it’s important to note that this does not mean the debt must be fully repaid by that date.
Once the arrangement is in place and has been accepted by IR, taxpayers have until 1 October 2027 to satisfy the arrangement, providing additional time to manage cash flow while still accessing the benefits of the programme.
If you're unsure whether a client may qualify, we recommend starting the conversation sooner rather than later to ensure there's enough time to assess eligibility and put an arrangement in place before the 1 October 2026 deadline.
The amount a taxpayer can save will depend on their circumstances, including the amount of income tax debt, when it was originally due and when they wish to settle with Tax Traders.
To illustrate the potential benefits, we modelled three taxpayers with $15,000 of income tax debt for the 2023 tax year.
The Tax Traders payment date in all three scenarios is 28 September 2027.
| Scenario | Total cost to settle with IR (includes UOMI + LPP) | Total cost with Tax Traders | Estimated UOMI and LPP saving with Tax Traders |
| The 2023 RIT is below $60,000. Debt due 7 April 2024. | $20,839 | $19,368 | $1,471 |
| The 2023 RIT is $60,000 or more. Debt due 7 May 2023. | $22,320 | $20,788 | $1,532 |
| Debt spread evenly across the 2023 provisional tax dates (28 Aug 2022, 15 Jan 2023 and 7 May 2023) | $22,755 | $21,213 | $1,542 |
As a general rule, the earlier the original due date, the greater the potential savings. Taxpayers with historic liabilities dating back to the 2023 tax year can often achieve particularly favourable outcomes in terms of reducing their interest cost and eliminating late payment penalties.
While every taxpayer's circumstances are different, these examples illustrate why it's worth reviewing historic income tax debt, even where a client already has a payment arrangement in place with IR.
To help firms uncover opportunities, we've recently launched our new Debt Pilot Report.
Available to firms with an IR data feed connection, the report highlights clients with 2023 and/or 2024 income tax shortfalls who may be eligible for the programme.
It's a simple way to prioritise client conversations, find out potential savings and take action before the 1 October 2026 entry deadline.
If you're unsure whether a client may qualify for the debt-pilot programme, get in touch with our team.
We'd be happy to help.