NZ businesses owe $1.4b in unpaid GST and PAYE for 2025 tax year

Businesses owe over $1.4 billion in unpaid GST and PAYE from the 2025 tax year.

By Susan Edmunds of RNZ

New Zealand businesses owe more than $1.4 billion in unpaid GST and PAYE from the 2025 tax year, in what commentators say is a sign of the stress many parts of the economy are still under.

Inland Revenue has provided a breakdown of PAYE and GST still unpaid for the tax years 2018 through to 2025.

There is still almost $48m unpaid from 2018 – and $1.471 billion from the most recent year.

Of 2025’s number, $432.9m relates to employer activities and $1.047b to GST.

Just over $66m of the debt was from businesses or individuals who were bankrupt or in liquidation.

Businesses collect GST on their sales and then send it to Inland Revenue when they file their GST returns.

Deloitte partner Allan Bullot had earlier warned that GST debt could be creating a wave of zombie companies.

Construction had the largest share of unpaid PAYE and GST, with a total of almost $1b over the tax years from 2018 through 2025.

Rental, hiring and real estate services was next with $533.5m.

On a measure of debt per thousand enterprises, electricity, gas, water and waste companies had the largest unpaid amount in the most recent tax year.

Robyn Walker, a tax partner at Deloitte, said Inland Revenue had been given a clear message to collect more of the money it was owed.

The number of businesses being liquidated by Inland Revenue has jumped in recent years.

Walker said the data could indicate that other creditors to those businesses were in a precarious position.

If a business failed, Inland Revenue would be the first to be paid, which could reduce a business’ ability to pay anyone else it owed.

“People could be choosing to pay other business suppliers first - but they maybe aren’t paying anybody... there’s potential for a lot of collateral damage if Inland Revenue is allowing tax debt to accumulate.”

She said people who were not able to pay GST and PAYE should contact their accountant to make sure they still had a viable business.

If a business had hired staff on the expectation it could pay them a certain amount before tax, and it turned out that they could not afford the PAYE component, there was probably a bigger issue at play, she said.

“The business may not be viable or may need help in a more substantive way.”

Simplicity chief economist Shamubeel Eaqub said the data highlighted the distress many businesses were facing.

“Some businesses - not many - think it’s okay not to meet their responsibilities.

“PAYE and GST are only collected on behalf of New Zealanders, it’s not your revenue.... there’s a risk to other creditors.”

He said businesses with tax debt were quite often not viable and owners could be breaching their directors’ duties.

“It can mean big problems, that’s why the IRD has been so active... it’s the right thing to do.”

The data showed Inland Revenue had written off $110.3 million of unpaid PAYE and GST in 2018, $109.1m in 2019, $85.5m in 2020, $94.8m in 2021, in 2022, $99.3m in 2023, $56m in 2024 and $7.6m from the last tax year.