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Penalties and interest

If you know that you will not be able to pay your tax on time or if you currently have an amount outstanding, there are a number of options available to you. Also learn about the penalties and interest that may apply for failing to meet tax obligations.

Interest

Interest rules are generic across all taxes and duties. They do not apply to student loan repayments or child support payments. Two-way interest rules mean that we pay interest on overpayments and you are charged interest on tax that is underpaid.

Penalties in general

The purpose of penalties is to encourage taxpayers to comply with their tax obligations. The penalties are charged in relation to breach in taxpayer obligation.

Late filing penalties

The law requires you to file your tax returns by their due dates. If you don’t, you may have to pay a late filing penalty. If you receive a reminder to file your return or an account for a late filing penalty, file the outstanding return right away or let us know if you are not required to file a return.

To find out if you are required to file an income tax return see either Business income tax - Filing returns.or Individual income tax - Work out if you need to do anything.

Electronic filing

Employers whose annual PAYE and SSCWT deductions are more than $100,000 in the previous year must file their Employer monthly schedule (IR348) electronically.

Late payment penalties

If your taxes and duties are not paid by the due dates, you may have to pay a late payment penalty.

Remission

The tax laws allow us to remit penalties only in very limited circumstances. Remission means the penalties are legally waived and are no longer payable.

Shortfall penalties

The different types of audits we do, how we select you for an audit and what it will involve.

Criminal penalties

Criminal offences attract the same penalties regardless of the type of tax involved.

Grace period

If this is your first late payment in a two-year period, you will be allowed a grace period. This means that you will have a further period to make payment. If you do not pay, the late payment penalty will be imposed from the due date. Interest will continue to apply.

Non-payment penalty on employer monthly schedules (EMS)

If you file your employer montlhy schedule without payment, you may have to pay non-payment penalties as well as late payment penalties.