If your ability to pay tax on time has been impacted by COVID-19, from 10 June you can submit a request for remission of penalties and interest through myIR.
When the Commissioner will remit penalties and UOMI
By making a request for remission, you confirm that:
- some or all of your amounts owing were due on or after 14 February 2020
- your ability to pay by the due date, either physically or financially, has been significantly affected by COVID-19
- you have contacted the Commissioner as soon as practicable to request relief, and will be required to pay the outstanding tax as soon as practicable.
The Commissioner will decide whether the customer has been significantly affected by COVID-19 financially where the customer’s income or revenue has reduced because of COVID-19 and that because of that income or revenue reduction cannot pay their taxes in full and on time.
There are certain conditions that need to be met to determine 'as soon as practicable'.
Information to be provided when requesting relief
We will be trying to minimise the information we ask for during these unusual times. By continuing to file GST and other returns we will have a lot of the information we would normally ask for. However, customers should be able to provide, if asked:
- at least three months banks statements and credit card statement
- any management accounting information
- a list of aged creditors and debtors.
We will not ask for that information in every case, but the information should be available if we do ask for it.
For businesses, we'll be looking to understand the customer’s plan to sustain their business. We understand you might not be able to get all this information at this time given the COVID-19 lockdown. We will work with you based on what you know and are able to access at this time and will continue to do so as more information becomes available.
A similar process will apply for setting up instalment arrangements through myIR, and the criteria above will also apply to such arrangements.
There will be a question to advise whether or not you’re affected by COVID-19 as part of the instalment arrangement. An overnight process will automatically stop the addition of interest and penalties for eligible items.
If you want to provide additional information, send us a message, and we’ll get back to you.
You’ll receive a letter confirming the arrangement.
If the arrangement defaults, and the core tax is not paid, the penalties and interest will be reinstated from the original due date.
New sections of the Tax Administration Act 1994 (TAA)
To assist customers, we already have financial relief and remission provisions in the Tax Administration Act 1994 (TAA). The Government has also introduced new sections 183ABAB and for provisional taxpayers 183ABAC into the TAA 1994 giving us the ability to remit use of money interest (UOMI) charged if the customer's ability to pay tax on time has been significantly adversely affected by the COVID-19 outbreak.
This new provision includes both when a customer is physically unable to make a tax payment on time and also when a customer is financially unable to make a tax payment on time because of the economic effects of the COVID-19 outbreak. Our ability to remit interest under s 183ABAB applies to tax payments due on or after 14 February 2020, and ends on 25 March 2022. The remission of interest under 183ABAC on provisional tax applies for the 2021 tax year.
For consistency, we intend to use the same dates in considering relief more generally for customers adversely affected by COVID-19. The principles below that apply to considering the new section 183ABAB and 183ABAC, will also be applied when considering other forms of relief from penalties for customers who have been significantly adversely affected by COVID-19.
It is important that customers who can pay their taxes on time continue to do so. The following special provisions will apply only to customers who have been significantly adversely affected by the COVID-19 outbreak.
While this sets out the Commissioner’s approach to remitting penalties and UOMI, we understand that each customer’s situation is unique.