There are certain topics that we enjoy being cynical about. The speed at which oil companies increase their price at the pump when the price of crude increases versus the speed at which it drops when the price of crude decreases. Or similarly, how quickly banks increase interest rates when the OCR increases, versus reducing it for OCR decreases.
Could it be time to add the IRD to the above list? The table below summarises the movements in the OCR over the last few years and compares those movements to the interest rate charged by IRD. It is generally understood that IRD does not wish to be treated as a bank; therefore, there is a large variance between the debit and credit rates. However, given the punitive nature of the debit rate charged, it is reasonable to expect more timely reductions in the rate.
| Date | OCR | IRD Rate | Relative Difference |
| 17/01/23 | 4.25 | 9.21 | 4.96 |
| 22/02/23 | 4.75 | 9.21 | 4.46 |
| 05/04/23 | 5.25 | 9.21 | 3.96 |
| 09/05/23 | 5.25 | 10.39 | 5.14 |
| 24/05/23 | 5.5 | 10.39 | 4.89 |
| 29/08/23 | 5.5 | 10.91 | 5.41 |
| 14/08/24 | 5.25 | 10.91 | 5.66 |
| 09/10/24 | 4.75 | 10.91 | 6.16 |
| 27/11/24 | 4.25 | 10.91 | 6.66 |
| 16/01/25 | 4.25 | 10.88 | 6.63 |
| 19/02/25 | 3.75 | 10.88 | 7.13 |
| 09/04/25 | 3.5 | 10.88 | 7.38 |
| 08/05/25 | 3.5 | 9.89 | 6.39 |
| 28/05/25 | 3.25 | 9.89 | 6.64 |
| 20/08/25 | 3 | 9.89 | 6.89 |
| 08/10/25 | 2.5 | 9.89 | 7.39 |
How We Can Help
The gap between the Official Cash Rate and IRD’s interest rates highlights the significant cost of falling behind on your tax obligations. At Moore Markhams, our purpose is to help you thrive by providing proactive and strategic tax advice. We understand that managing cash flow can be challenging, and punitive interest rates only add to the pressure.
Our experienced advisors can work with you to develop a robust tax plan, ensuring you meet your obligations on time and avoid unnecessary costs. If you are facing tax debt, we can help you understand the implications and explore the best path forward, whether that involves negotiating an arrangement with IRD or restructuring your finances.
By partnering with us, you gain an expert team dedicated to safeguarding your business’s financial health. Let us help you navigate your tax landscape with confidence, minimising your exposure to high interest rates and allowing you to focus on your business’s growth.
