IRD Hardship Write-Off

IRD Hardship Write-Off

Our team at Tax Debt Management provides expertise with wide range of issues relating to individuals and businesses tax debt. This includes helping individuals with lodging an IRD Hardship Write-Off Application.

We have extensive experience with the application process and the application requirements.

If your tax debt has reached a point where it simply cannot be repaid, you may qualify for a hardship write-off with Inland Revenue. This is one of the most difficult outcomes to achieve, but when structured correctly, it can significantly reduce or eliminate your debt.

What We Do

We build a strong, evidence-based case to support a write-off under the Tax Administration Act 1994 (care and management provisions):

  • We complete review of your financial position.
  • We identify your inability to repay without serious hardship.
  • We prepare detailed financials and cashflow forecasts.
  • We assess assets and repayment capacity.
  • We structure a realistic proposal (often including a partial repayment approach).
  • We negotiate directly with IRD on your behalf.
  • We push for maximum possible debt reduction.

When a Write-Off May Be Possible

A hardship write-off may be considered where:

  • You have no realistic ability to repay the full debt.
  • Repayment would cause serious financial hardship.
  • Your financial position is unlikely to materially improve in the foreseeable future.
  • All other options (instalments, refinancing, asset realisation) have been explored.

In these cases, Inland Revenue may exercise its discretion under the ‘care and management’ provisions to accept a reduced settlement or write off part of the debt, where doing so represents the highest net return practicable.

What Inland Revenue Considers

Inland Revenue does not grant tax write-offs lightly.

Each application is carefully assessed against its internal policies and legislative framework. To maximise the chances of approval, your application must clearly detail:

  • Your full financial situation: This includes providing accurate and complete information regarding your income, expenses, assets, and liabilities.
  • Your current status of all your tax requirements: This includes detailing all outstanding tax returns that have been filed your outstanding tax obligations (GST, PAYE, Income Tax). Ideally these should all be filed, current, and on record with the IRD. We can help you file any outstanding ones.
  • Your genuine level of financial hardship: Documents will need to be provided showing that your outstanding tax debt and any required payments would create serious financial strain, not just a level of inconvenience.
  • For you, there are no viable alternatives: Your application needs to clearly convey that the standard options of refinancing, asset sales, or commencing an instalment arrangement are not feasible.
  • Your future financial situation: Your application needs to provide a realistic summary of your financial position and whether it is likely to improve.

As part of your IRD Hardship Write-Off application, when making their decision, Inland Revenue will also consider:

  • Your past compliance history.
  • Your previous payment behaviours.
  • The overall integrity and requirements of the tax system.

A well-prepared application that directly addresses these factors significantly increases the likelihood of achieving a favourable outcome. This may include a part or full agreement to reduce your outstanding tax debt amount.

Enquiry Form