Inland Revenue deduction notice: what to do in the first 24 hours

Most business owners find out about a deduction notice the hard way: a payment bounces, or the balance is far lower than expected, and the bank explains that Inland Revenue has required it to hand over funds. It’s a shock, and it can leave the business unable to pay wages or suppliers. But it is also a very clear signal that Inland Revenue wants to talk — and the faster you engage, the more options you keep.

What exactly is a deduction notice?

A deduction notice is one of Inland Revenue’s collection tools. It requires a third party that holds money for you — usually your bank — to pay some of that money to Inland Revenue to reduce your tax debt. It can be a one-off or ongoing.

Inland Revenue has been using these far more often. Its October 2025 media release said it had issued 16,500 planned bank deduction notices since mid-June 2025, 25 per cent more than for the whole of the previous year, and completed 8,181 deductions between mid-June and 30 September. Its January 2026 update said collection of overdue GST and employer debt remained a focus, with bank deductions among the actions it may take.

What should I do in the first hour?

1. Log in to myIR. Check the full balance by tax type, which returns are outstanding and whether any arrangement exists.
2. Call Inland Revenue. Ask what the notice covers, how much is being deducted and what would stop it.
3. Check your bank account. Know what has been taken and what’s left.
4. List what’s due this week. Wages, PAYE, suppliers, rent.

Don’t ignore calls or letters. Inland Revenue’s own advice is to respond, pay through myIR if you can, or set up an instalment arrangement if you can’t pay in full.

What are my options?

Option	When it fits
Pay in full from your own funds	You have the cash, or can free it quickly
Instalment arrangement	The debt is manageable over time and Inland Revenue agrees
Fast business loan paid to Inland Revenue	You need the debt cleared now to protect the business
Combination	Part-pay now, arrange or fund the rest

Inland Revenue notes that it charges interest on overdue amounts and includes it in arrangement instalments. A loan has its own cost, so compare the two — including the cost of continued enforcement on your business account.

How fast can a loan clear the debt?

• Smaller balances, steady trading: unsecured, same-day funding possible.
• Larger balances: property-secured, with $20k to $250k possible same day and up to $5m possible within 24 to 48 hours.

Funds are often paid directly to Inland Revenue. Have your myIR summary, the notice, six months of statements and ID ready, then send an enquiry now with “IRD deduction notice” in the notes.

What will the lender want to know?

• The full balance by tax type.
• Whether all returns are filed.
• The deduction notice details and amounts taken so far.
• Your trading position since the debt built up.
• Any property available as security.

Our IRD status check explains how to pull this together quickly.

How do I make sure it doesn’t happen again?

• Keep GST and PAYE in a separate account the day money comes in.
• File every return on time, even if payment will be late.
• Contact Inland Revenue early if a payment will be missed.
• Consider a line of credit for lumpy tax periods.

What happens to payroll and suppliers while this is sorted?

A deduction can leave the account short just as wages fall due. If that’s your situation, deal with both at once: tell the specialist the payroll date as well as the tax balance, so the loan can cover the shortfall and the tax in one go if that’s sensible. See payroll due this week for the steps that protect your team. Keep suppliers informed with a realistic date rather than silence — most will wait a few days for a business that’s clearly sorting things out.

What if the deduction has left the account overdrawn?

Call your bank as well as Inland Revenue. Ask what has been taken, whether further deductions are scheduled and how any dishonoured payments will be handled. Keep a list of payments that bounced so you can contact those suppliers quickly with a revised date. If wages are due, mention it on the first funding call so the specialist can size the loan to cover both the tax and the immediate shortfall where that makes sense.

Illustrative example: a Christchurch builder

Illustrative only. A Christchurch building company owing $54,000 in GST and PAYE has $11,000 taken under a deduction notice, leaving payroll short. The director calls Inland Revenue the same morning, confirms the balance, and enquires with myIR screenshots and statements ready. A loan secured on the director’s home is approved; on settlement, funds go directly to Inland Revenue to clear the balance and the director confirms with Inland Revenue that the deductions will stop.

Received a deduction notice? Don’t wait.

Every day of silence makes options narrower. Send a short enquiry — it takes about a minute and there’s no credit check when you first enquire. Your details aren’t distributed to a series of lenders; a real person reads them and calls you without judgement. Please include the real balance from myIR so we can plan a clean, fast fix.

Act on my IRD debt today →