Can I pay my IRD tax bill with a credit card, and should I?

Yes, you can pay Inland Revenue with a credit card. IRD takes Visa and Mastercard in myIR, and the bank adds a 1.42% fee. For a small gap you’ll clear before the card’s interest-free period runs out, that’s often cheaper than paying late. For a big or repeating tax bill, it’s an expensive way to buy time.

Mr hears this question most weeks, usually a few days before the 28th. The GST return is done, the number is bigger than the bank balance, and there’s a card in the wallet with room on it. So let’s work out when that card is a sensible bridge and when it’s a trapdoor.

How do you pay IRD by credit card?

It’s done inside myIR. According to Inland Revenue’s card payment page, you:

1. Log in to myIR and find the account you want to pay, such as GST, income tax or employer deductions.
2. Choose Make a payment on that account panel, then Make a payment again.
3. Check the details, accept the payment terms and enter your card.
4. Authorise the transaction, and ask for the confirmation email.

A few things worth knowing before you start:

• Visa and Mastercard only. Other card types won’t go through.
• Balances only. IRD says you “can only make card payments towards an account balance”, so the amount needs to be showing in myIR.
• The fee is separate. The 1.42% goes to the bank, not to IRD, and appears as its own line on your card statement.
• Debit cards pay the fee too. It applies to credit and debit cards alike, so a debit card has no advantage over a normal bank transfer.

Mr says: If the money is sitting in your business account, use the “Pay tax” or “Pay IRD” option in your banking app instead. Same result, no fee. The card only earns its keep when the cash genuinely isn’t there yet.

What does the 1.42% fee actually cost?

Here’s the fee at a few common bill sizes:

Tax bill	Card fee at 1.42%	Total charged to the card
$3,000	$42.60	$3,042.60
$8,000	$113.60	$8,113.60
$15,000	$213.00	$15,213.00
$40,000	$568.00	$40,568.00

Most business cards have an interest-free period, but only if the full statement balance is cleared by the due date. Miss that and card interest starts, usually at a much steeper cost than secured business borrowing. The fee is the visible cost; the interest on a balance you can’t clear is the hidden one.

Is paying by card cheaper than paying IRD late?

For a short gap, usually yes. IRD’s late payment penalties run in stages:

• 1% of the unpaid tax the day after the due date;
• a further 4% of what’s still owing, penalties included, on the seventh day;
• for most tax types, 1% every month after that. IRD doesn’t charge the monthly stage on GST or income tax (including provisional tax), but employer deductions have their own, tougher regime.

On top of penalties, IRD charges use-of-money interest, calculated daily, on underpaid tax.

So on a $12,000 GST bill, being more than a week late adds roughly $605 in penalties before interest: $120 on day one, then 4% of $12,120 on day seven. The card fee on the same bill is $170.40. If you can clear the card in full within a few weeks, the card wins comfortably.

There’s one wrinkle. IRD says that if it’s your first late payment in a two-year period, it may give you a grace period before charging penalties. That’s a “may”, not a promise, and if you miss the new date the penalty goes back to the original due date. Mr wouldn’t plan around it.

When is a credit card the right call?

Mr’s rule of thumb is that a card suits a gap that’s small, short and already solved. Run your situation past these:

• You know where the money is coming from. A customer payment is due in a fortnight, or the busy season starts next month.
• The card can be cleared in full before its interest-free period ends.
• The bill fits under your limit without leaving the card maxed out for everyday costs.
• It’s a one-off. A big GST period after a strong quarter, or a provisional tax instalment that came in higher than usual.

If you can tick all four, the 1.42% is a reasonable price for keeping your IRD record clean.

When does it become a trap?

The card turns from bridge to trapdoor when:

• You’re paying this GST with the card and last GST with the card too. That means GST collected is being spent on running costs, and the card is quietly turning into a long-term debt.
• It’s employer deductions. PAYE, KiwiSaver and ESCT are your staff’s money. Needing a card to pay them regularly is a red flag about cash flow, and it’s worth reading what to do if you’re behind on PAYE and KiwiSaver.
• The bill is bigger than the limit. Splitting a tax bill across several cards, or a card and a late payment, multiplies the cost and the stress.
• There’s already an IRD debt. Paying today’s GST on a card while an older balance grows doesn’t fix the older balance.

Mr says: A credit card doesn’t make a tax bill smaller. It just changes who you owe and how fast the meter runs. Be honest about whether you’re bridging a gap or hiding one.

How does this look to a lender later?

This is the part most owners don’t think about until they apply for finance. When you put a large tax bill on a card:

• Your credit file shows the card’s balance against its limit. A card sitting near its limit, month after month, reads as financial pressure.
• Your bank statements show big card repayments, and a lender reading them can usually tell what they were for.
• Your shareholder current account may change if you used a personal card to pay company tax. That’s an accounting point to sort with your accountant, but lenders do look at it.

None of that stops you borrowing. A single card payment, cleared quickly, barely registers. A pattern of tax going on plastic is what makes a lender ask questions. If a bigger tax bill is looming, it’s worth asking Mr what your options look like before the card gets loaded up, not after. There’s no credit check just for asking.

What are the alternatives to the card?

Option	Best for	Watch for
Pay from the bank account	Cash is there; you just need the nudge	Don’t leave too little for wages and suppliers
Credit card (1.42% fee)	Small, short gap you’ll clear in weeks	Card interest if the balance lingers
IRD instalment arrangement	Moderate balances you can pay down monthly	Current tax must stay up to date
Business loan	Larger bills, or clearing the backlog in one go	The full cost and repayments must fit
Talking to IRD early	Any time you can’t pay on the due date	Silence makes every option worse

Inland Revenue’s own guidance for people who are struggling to pay their tax is to get in touch early. An instalment arrangement can spread a bill over time, and for business customers IRD may ask for a twelve-month cash flow forecast. If you’re weighing up whether to borrow to pay your GST bill, that page sets out when it’s sensible and when it just delays the problem.

For bigger amounts, property-secured business loans run from $20k to $5m, and unsecured options for trading businesses are typically $5k to $500k, sized on turnover and bank statements. Either can often pay IRD directly, so the balance is cleared in one go.

Which tax dates should you have in the diary?

The card question tends to crop up around the busiest due dates. For a business with a 31 March balance date, the ones coming up include:

• 28 October — GST for most periods ending 30 September.
• 15 January — GST for periods ending 30 November, and the second provisional tax instalment for standard-method payers.
• 7 May — GST for periods ending 31 March, and the third provisional tax instalment.

That 15 January date lands straight after the Christmas shutdown, when takings are thin, which is exactly when Mr gets the most card questions. Our tax due dates tool lays out your own dates for the next twelve months, and the Christmas shutdown cash plan shows how to get ready for January.

An illustrative example

This example is invented.

A Nelson bike hire and repair shop has a big September quarter as the spring season starts. The GST return shows $9,500 due on 28 October. The bank account has $6,000, and a corporate event booking worth $7,000 will be paid on 10 November.

The owner’s options:

• Pay late. Around $480 in penalties by the seventh day, plus use-of-money interest, and a mark on their IRD record.
• Pay by card. A fee of $134.90, the full amount paid on time, and the card cleared on 10 November well inside its interest-free period.

The card is the clear winner. But the owner also notices this is the third GST period in a row that’s been tight. So the next step is a separate tax account, with a set amount moved across every week, so the January bill doesn’t need the card at all.

If the same shop had owed $30,000 across GST and a provisional tax instalment, with no clear date for the money to arrive, the answer would be different: an instalment arrangement or a business loan, not a card.

Got a tax bill bigger than the card? Ask Mr

A credit card is a fine tool for a short, small gap. When the IRD balance is bigger than your limit, or the gap keeps coming back, it’s time to look at something built for the job. Mr helps New Zealand owners with GST, provisional tax and older IRD balances all the time, and a tax bill on its own doesn’t put us off.

Here’s how it works:

• About 60 seconds to tell us what’s owed and what your business does. Asking doesn’t touch your credit file, so there’s nothing to lose by finding out.
• Your details stay with us. We don’t send your details to a pile of lenders, so your phone won’t start ringing off the hook.
• A real person looks at your situation, including the tax type, the due dates and any arrangement already in place, and calls you to talk it through.
• Please be accurate on the form. The exact myIR balance and the right due date help us suggest the right option the first time.

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