If you overpay any tax or duty, we'll pay you back with interest. If you underpay tax, we'll charge you interest. This is often called use of money interest, or UOMI. We may also charge a penalty with interest.
What interest is applied to
Interest applies to these taxes, duties and revenue types:
- casino duty
- child support deductions by employers (CSE)
- FamilyBoost (FMB)
- Fees Free (FFR)
- fringe benefit tax (FBT)
- gaming machine duty and problem gambling levy
- goods and services tax (GST)
- imputation accounts
- income tax
- KiwiSaver contributions
- lottery duty
- non-resident withholding tax (on interest and dividends)
- overseas pension transfers (OPT)
- PAYE deductions
- residential land withholding tax (RLWT)
- resident withholding tax (RWT) (on interest and dividends)
- student loan deductions by employers
- ESCT (employer superannuation contribution tax)
- totalisator duty (betting levy)
- Working for Families Tax Credits (WfFTC).
Amounts and payments we do not apply interest to
We do not apply interest for:
- amounts under $100
- child support payments.
We do not apply credit interest for FamilyBoost and Fees Free.
Student loans may have interest applied.
Student loan interest and fees
Interest rates on overpayments or underpayments
We calculate interest daily on your overpaid or underpaid tax. It does not compound and is not included when we calculate penalties.
The interest rates formulas are set down in legislation. We update them to reflect market rates, so they change over time.
| When interest rate started | Interest rate we charge | Interest rate we pay |
|---|---|---|
| 16 January 2026 | 8.97% | 2.25% |
| 8 May 2025 | 9.89% | 3.27% |
| 16 January 2025 | 10.88% | 4.30% |
| 29 August 2023 | 10.91% | 4.67% |
| 9 May 2023 | 10.39% | 3.53% |
| 17 January 2023 | 9.21% | 2.31% |
| 30 August 2022 | 7.96% | 1.22% |
| 10 May 2022 | 7.28% | 0.00% |
| 8 May 2020 | 7.00% | 0.00% |
| 29 August 2019 | 8.35% | 0.81% |
When we start charging interest and when we stop
If you've underpaid tax or duty, interest:
- starts on the day after the original due date for the amount owing, or
- starts from a new due date (if you received Working for Families Tax Credits and you meet the criteria to have a new due date).
Interest stops on the day the overdue balance (including interest) gets paid in full.
When we start paying interest and when we stop
If you've overpaid tax or duty, interest starts on the latest of:
- the day after the original due date
- the day after payment.
If you need to file a tax return to get a refund of your overpayment, interest starts on the latest of the:
- original due date
- day after the payment that generates the refund (that's when the credit becomes available)
- date you filed your return.
In most cases, interest stops the day the overpaid tax is refunded or transferred to another tax account or period.
Remitting use of money interest
We will remit interest in limited circumstances, such as when we give the wrong advice and that advice has directly resulted in non-compliance.
Before you ask us to remit interest, read Standard Practice Statement SPS 18/04 and make sure your situation meets the conditions.
SPS 18/04 Options for relief from tax debt (taxtechnical.govt.nz)
Interest you're paid is gross income
Interest you're paid on an overpayment is gross income. You'll need to include it in your income tax return or income tax assessment in the year it was refunded. You need to do this even if you use the interest to pay other unpaid tax.
If we reassess your return and we find that you've overpaid, we may pay interest. This is also gross income but only in the income year after the year of assessment.
Underpaid interest is deductible
Interest you pay on underpayments of tax is deductible for business purposes. You can claim it as an expense on your income tax return.
If we reassess your return and we find that you've underpaid, you may have to pay interest. This is also deductible, but only in the income year after the year of reassessment.
Interest on tax in dispute
When you're disputing a tax amount, you can put payment on hold until we make a decision. If we decide the amount in dispute is not right, we'll refund the disputed tax and pay you interest on it. If we decide that the amount in dispute is right, you'll have to pay us any amount owing and any interest on it.
Interest and extra time to pay
When you get a notice of assessment or a statement of account balance, you have up to an extra 30 days to pay. If you pay the balance in that time, you do not need to pay the interest we add between the date we issued the notice or statement and the date of the payment.
If you pay after more than 30 days, we’ll recalculate the interest amount. This means the balance may not be cleared in full.
Interest and payments
Payments you make to clear unpaid tax are used to pay off unpaid interest and then tax. The exception to this rule is for payments of provisional tax, where payments are used for provisional tax instalments as directed by the taxpayer.
Credit interest may be used to pay other unpaid taxes.
GST and provisional tax
There are different rules about interest on GST and provisional tax.