The IRD just made it much easier to wreck your business credit rating — and most Kiwi business owners have no idea.

From 13 October 2025, Inland Revenue changed how they report unpaid tax debt to credit agencies. If you’re running a farming operation or rural business with tax debt, these changes could blindside you at the worst possible time — like when you’re trying to secure seasonal finance for the spring or negotiating that farm purchase you’ve been working towards.

Let’s cut through the technical stuff and talk about what this actually means for your business.

What is Credit Reporting?

Since 2017, IRD has been able to share information about significant unpaid tax with Centrix, New Zealand’s credit reporting agency. Think of it like a black mark on your business’s financial record. When IRD credit reports your company, it appears on your credit file and can seriously impact your ability to:

• Get seasonal finance for feed, fertiliser, or stock purchases
• Refinance existing debt or secure new loans
• Purchase or lease farm equipment
• Buy additional land or farms
• Pass bank covenant reviews

For a farming business operating on tight margins with seasonal cashflow, a damaged credit rating isn’t just inconvenient — it can be catastrophic.

The Old Rules (Before 13 October 2025)

Previously, before IRD could credit report your business, they had to meet strict criteria:

1. The debt threshold: Over $150,000, OR unpaid for a year and equal to 30% or more of your company’s assessable income
2. Reasonable efforts: IRD had to make substantial attempts to collect the debt
3. Formal notification: They had to formally notify the company AND individual directors 30 days before credit reporting

The “reasonable efforts” requirement meant IRD typically had to do more than just send standard reminder letters. They’d need to engage with you, discuss payment options, and genuinely try to resolve the situation.

What Changed on 13 October 2025

IRD has significantly lowered the bar for what they need to do before damaging your credit rating. Here’s what’s different:

1. “Reasonable Efforts” Has Been Watered Down

Under the new pilot programme, “reasonable efforts” now simply means IRD has sent their standard overdue reminders and offered payment options — even if you haven’t engaged with them yet. That’s it. No phone calls required. No meetings necessary. Just automated letters.

If you’ve been ignoring those brown IRD envelopes thinking “I’ll sort it next month,” you’re now playing a much more dangerous game.

2. Only the Company Gets Formally Notified

Previously, individual directors would be notified before credit reporting occurred. Now, formal notification to the company is sufficient.

What does this mean in practice? The Notice of Intent will appear in your company’s myIR account and be couriered to your registered office. If you’re not regularly checking myIR, or if your registered office is your accountant’s address and mail is delayed, you could miss this critical notification entirely.

3. You Still Get 30 Days — But the Clock Starts Fast

You have 30 days from when the notification is delivered to your registered office to take action. Not 30 days from when you actually see it. Not 30 days from when you get around to checking myIR. 30 days from delivery.

If that courier shows up at your registered office on a Friday and the envelope sits on a desk over a long weekend, you’ve already lost four days of your 30-day window.

Real-World Impact: What Does This Look Like?

Let’s look at two scenarios that might hit close to home:

Scenario 1: The Seasonal Cashflow Squeeze

You run a 400-cow dairy operation, and they’ve got $180,000 in unpaid PAYE and GST sitting with IRD. They’ve been making token payments but haven’t formally arranged an instalment plan.

Spring arrives, and they you to secure $250,000 in seasonal finance for supplementary feed. Their bank runs a credit check and finds IRD has credit reported them. The bank declines the facility. You could Face a potential 20% drop in production because they can’t afford the feed, All because of $180,000 in tax debt that could have been managed with a proper payment arrangement.

Scenario 2: The Farm Purchase Gone Wrong

A family has been negotiating for 18 months to purchase the neighbouring 120-hectare block. They’ve got a conditional sale and purchase agreement, subject to finance. Their company has $165,000 in unpaid tax from two years ago — they’ve been making irregular payments but no formal arrangement.

IRD sends a Notice of Intent to their solicitors office (their registered office). The Lawyer is away on leave. By the time the Mitchells find out, they’re on day 28 of their 30-day window. They scramble to set up a payment plan, but IRD credit reports them anyway.

Their bank pulls the farm purchase finance. The deal falls through. The neighbouring block sells to someone else. They lose their once-in-a-generation expansion opportunity.

The Numbers That Put You At Risk

You’re at risk of credit reporting if you meet either of these thresholds:

1. $150,000 or more in unpaid tax debt (regardless of how long it’s been outstanding or your income level), OR
2. Debt unpaid for 12 months that equals 30% or more of your company’s assessable income

That second threshold catches more people than you’d think. If your farming operation has assessable income of $500,000, you’re at risk with just $150,000 of debt that’s been sitting for a year. For many seasonal businesses, a year can pass quickly when you’re focused on operations rather than IRD correspondence.

What You Need to Do Right Now

If you currently have tax debt:

1. Check your myIR account today — Log in and check for any Notices of Intent. Make this a weekly habit.
2. Set up a formal instalment arrangement immediately — Don’t wait. Even if you’ve been making payments, formalise it with IRD.
3. Confirm your registered office address — Make sure mail to this address reaches you promptly. If it’s your accountant’s office, ensure they have a system to notify you immediately when IRD correspondence arrives.
4. Talk to your accountant — We can help negotiate realistic payment arrangements with IRD and ensure you’re protected. It’s literally what we do every day.

If you’re concerned about cashflow:

Don’t let tax debt build up in the first place. If cashflow is tight:

• Talk to us before you miss a payment deadline
• Consider provisional tax payment arrangements that match your seasonal income
• Use the Income Equalisation Scheme to manage lumpy dairy income
• Build a cash reserve during good seasons to cover tax obligations in tough years

Why This Matters More Than Ever

New Zealand’s rural economy is facing significant headwinds, increasing costs for everything from fuel to fertiliser, wages  and other operating costs all squeeze cashflows.

When margins are tight, it’s tempting to prioritise operational expenses over tax payments. The feed bill, the vet bill, the bank payment — these feel more urgent than the IRD payment. But with these new credit reporting rules, ignoring tax debt has never been riskier.

A credit report doesn’t just affect your current situation. It stays on your file and can impact your business for years. It can limit your options exactly when you need them most — during droughts, market downturns, or when opportunity knocks for expansion.

The Bottom Line

IRD’s new approach to credit reporting means you have less room for error and less time to fix problems. The safety nets that existed before — the requirement for substantive collection efforts, notification to directors — are largely gone.

The good news? This is entirely avoidable. Communication with IRD is your best defence. A formal payment arrangement, even if it’s modest payments over an extended period, prevents credit reporting. IRD would generally rather have a payment plan than damage your credit rating.

Your action plan:

1. Check myIR today
2. If you have unpaid tax, arrange a formal payment plan immediately
3. Make sure you receive IRD mail promptly
4. Talk to your accountant about tax planning that prevents debt building up

At CMK Accountants, we’ve been helping Taranaki farming families navigate tax challenges for nearly 70 years. We’ve seen the damage that tax debt and credit issues can cause, and we’ve helped countless clients avoid these problems through proper planning and proactive communication with IRD.

Don’t wait until you get a Notice of Intent. By then, you’re already in the danger zone.