IRD News
Final repayment date nears for IRD Small Business Cashflow Loans
The final repayment date is fast approaching for people who borrowed money through the Inland Revenue Small Business Cashflow (SBC) loan. The loans were introduced in May 2020 to help small to medium businesses affected by the COVID-19 pandemic.
From June 2025 Inland Revenue (IR) will default a loan if it has not been paid off. Default interest (calculated based on use of money interest of 10.88% (decreases to 9.89% on 8 May 2025) plus standard interest rate of 3%) will be charged.
IR have reported the following statistics:
more than 129,000 businesses were issued loans totalling $2.4 billion. The average amount approved was $17,000.
a high proportion of borrowers were sole traders followed by small businesses employing between 2 and 5 staff (FTE). The highest number of loans were taken out by businesses in Auckland where there were longer lockdown periods.
most took out a loan in the first few months of the scheme (May and June of 2020) and had 5 years to repay the loan. Many will reach their cut off point from June this year.
As of 31 December 2024, 51,021 people had repaid their loan in full, with a total loan balance of $953 million still owing. Approximately 10,000 loans are already in default, owing just over $161 million.
IR have advised they are actively taking steps to recover defaulted loans. In addition, they will be notifying customers who are behind on their repayment plan and letting them know there are consequences, such as default interest being added to the balance, if the loan remains unpaid.
You can check your SBC loan balance, repayment plan and make payments in your myIR account.
If you want to make changes to a repayment plan on your SBC or you’ve had a change in your circumstances, you can also contact IR through the secure channel in your myIR account to discuss options.
Enhanced Monitoring
At the beginning of this year Inland Revenue advised that over the following 12 months they would be conducting enhanced monitoring of businesses in the tattooing/piercing and hairdressing industries.
When IR conducts this type of monitoring it is to ensure there is a level playing field for businesses in New Zealand within that chosen industry. Inclusion in industry monitoring does not mean that you have done anything wrong, however they will be looking more closely at the tax affairs of these businesses.
If IR do find any issues:
they may visit the premises or refer the person/business for further investigation or audit
across multiple businesses in the monitored industry, they will increase their investigation and audit activity in this area over the next year.
Any industry could be chosen by Inland Revenue for monitoring so if you have any concerns about your tax affairs, or perhaps you remember an error you made in the past, please contact Chester Grey so we can work with you and Inland Revenue to find a solution.
Rate Changes
FBT prescribed investor rate
The prescribed rate used to calculate fringe benefit tax on low-interest, employment-related loans has decreased from 8.41% to 7.38%. This decrease applied from 1 April 2025.
Use of money interest rate change
From 8 May 2025, the UOMI rates on underpayment and overpayments of tax will change. The new rates are:
underpayment - 9.89% down from 10.88%
overpayment - 3.27% down from 4.30%.