Penalties and interest: Grace period

What is a late payment grace period?

In December 2007 legislation was enacted which allows the Commissioner to delay charging a late payment penalty on an overdue amount in certain circumstances.

If this is the first late payment in a two-year period, a warning letter will be sent to the customer advising payment has not been made and giving a further date for payment of the tax. 

If payment is made by this date, no late payment penalty will apply.

If payment is not made, the initial 1% and 4% late payment penalties will be added from the original due date. Any incremental late payment penalties will also be applied, if applicable.

All customers will start with a clean state from 1 April 2008.

The grace period will apply to tax due on or after 1 April 2008.

If an instalment arrangement is entered into before the due date of the tax, the grace period will not be applied allowing it to be used at a later date if required.

Date published: 26 Mar 2008

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