Latest / Early Edition with Ryan Bridge / Robyn Walker: Deloitte Tax Partner on over half a million Kiwis owing the IRD with tax debt growing to $9.4 billion

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

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  Speaker 1: Half a million kiwis now in debt to the IRD
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  Speaker 1: total kei we debt now nine point four billion, that's
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  Speaker 1: up from six billion and twenty twenty three. Now sixty
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  Speaker 1: five percent of that outstanding debt is for SMEETH, which
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  Speaker 1: is a worry. Robin Walker, Deloitte Tax partner with me
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  Speaker 1: this morning. Robin, good morning, good morning. Is this a
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  Speaker 1: COVID hangover the size of it?
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  Speaker 2: Yeah, I think that's definitely the case. You can see
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  Speaker 2: the numbers. There's reporting from about twenty twenty and from
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  Speaker 2: about twenty twenty three the debt numbers really start ballooning.
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  Speaker 2: And during those years inland revenue were directed to focus
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  Speaker 2: on COVID, put out those small business cash flow loans,
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  Speaker 2: do the COVID support payments, the resurgence payments and so on.
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  Speaker 2: That's what they were focusing on, rather than collecting debt
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  Speaker 2: as soon as it was outstanding.
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  Speaker 1: And when you're not collecting the debt it tends to grow. IID.
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  Speaker 1: You could argue a bit softly, softly and now going
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  Speaker 1: a bit more hardball, what are you seeing.
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  Speaker 2: Yeah, definitely the focus on it, and that's come direct
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  Speaker 2: from the government. They're saying you've got to go out
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  Speaker 2: and collect this money. You want to collect your debt
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  Speaker 2: is while it's fresh, right. So when we look at
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  Speaker 2: the statistics, ninety five percent of people pay all of
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  Speaker 2: their tax on time, and within six months, ninety seven
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  Speaker 2: point six percent of the tax is collected, So it
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  Speaker 2: is it is a small fraction, but it's significant when
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  Speaker 2: it's left uncollected over a significant period of time. So
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  Speaker 2: of the nine point four billion dollars that you mentioned,
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  Speaker 2: six point two million is the actual tax and the
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  Speaker 2: rest of it is interest in penalties. So you've got
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  Speaker 2: over three billion dollars of interest in penalties which are
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  Speaker 2: just adding to that and making it harder to repay
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  Speaker 2: that debt.
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  Speaker 1: When sixty sixty two percent of the debt that's outstanding
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  Speaker 1: is collectible, what do they mean by that? Does that
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  Speaker 1: just mean that that's the bit that they can likely
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  Speaker 1: get back minus though the interest and penalties you're talking about.
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  Speaker 2: Yeah, So it's look at how old is the debt
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  Speaker 2: and what is the type of debt? Is it debt
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  Speaker 2: that is subject to a dispute. Is it a company
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  Speaker 2: that's going through a liquidation process or something is stopping
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  Speaker 2: them able to collect the debt immediately? They don't write
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  Speaker 2: off the debt until obviously there's absolutely no chance. So
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  Speaker 2: that's kind of like a bit of an accounting thing
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  Speaker 2: to just say, well, what do we think we will
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  Speaker 2: actually be collecting?
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  Speaker 1: All right, Robin, good to have you on the show.
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  Speaker 1: This morning is always have a great day, Robin Walker,
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  Speaker 1: Deloitte Tax Partner. For more from Early Edition with Ryan Bridge,
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  Speaker 1: listen live to News Talks it be from five am weekdays,
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  Speaker 1: or follow the podcast on iHeartRadio.