Tax Payer Penalties

Fast Facts

Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid such charges, you should pay the full amount of tax you owe by the due date.

The main kinds of charges for failing to meet tax obligations are:

• • A shortfall penalty where the correct amount of tax is higher than the amount you paid (eg, because of an understatement of tax, or where the amount of a refund or loss is reduced).
  • A late payment penalty if you post or deliver a payment to IRD after the date it was due.
  • A late filing penalty if you do not file a return by the due date.
  • Interest on the amount of tax you owe if you have underpaid your tax. The interest rates charged are based on market rates.
  • EMS non payment penalties where you file an employer monthly schedule but do not pay the full amount payable on that schedule. These penalties are in addition to any of the other penalites that may also then be payable.

Interest: Credit and debit rates

Current and past interest rates

Two-way interest rules apply to all taxes and duties. If you overpay tax, IRD will generally pay you interest from the day after the original due date for the relevant return period (within certain rules). If you underpay, you will be charged interest from the day after the original due date for payment. This is the same as interest charged by banks on loans.

These rules are designed to:

- encourage you to pay the right amount of tax at the right time
- compensate you if you pay too much tax by paying you interest
- compensate the government if you pay too little tax by charging you interest.

Interest rates
The interest rates are set by government and are based on market rates, so they will vary over time.  

 

Period	Taxpayer’s paying rate %	Commissioner’s paying rate %
16 January 2011 and subsequently	8.89	2.18
29 June 2009–15 January 2011	8.91	1.82
1 March 2009–28 June 2009	9.73	4.23
8 March 2007–28 February 2009	14.24	6.66
8 March 2005–7 March 2007	13.08	5.71
8 November 2001–7 March 2005	11.93	4.83
8 November 2000–7 November 2001	12.62	5.74
8 March 2000–7 November 2000	10.84	4.67
8 March 1999–7 March 2000	10.59	3.38
8 November 1998–7 March 1999	12.48	4.79
7 July 1998–7 November 1998	14.69	8.26
1997/98 income year–6 July 1998	13.90	7.10

Interest on underpayments is linked to the market rate for short-term borrowing. Interest on overpayments is linked to the market rate for short-term deposits.


Wood Walton has more information to assist you so please Contact us.