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We have made a change in our system to reduce the number of transactions created by penalty and interest re-evaluations.

This change means software that uses Transaction Data Service (TDS) via Gateway Services (GWS) will, over time, see  a reduction in transactions from Inland Revenue (IR). It will be unnoticeable for most customers and there will be no impact on the balance of any accounts.

Previously, penalties and interest were re-evaluated nearly daily for some customers in our system, each time this happened the penalty and interest transaction on an account refreshed and created a new transaction in the background of our system. Often the amount of the penalty or interest transaction did not change with the daily refresh, so new transactions were created that had little to no value to customers or IR.

The change implements new system rules that will result in penalty and/or interest transactions, only refreshing when necessary:

  • Late payment penalties with incremental penalties – initial penalties (1% & 4%) will calculate and only refresh on a monthly cycle based on the date the 1% was charged.
  • Late payment penalties without incremental penalties (e.g. Income tax, Working for Families and GST) – will calculate the initial penalties (1% & 4%) and will reverse and replace once more one month after the 1% was charged.
  • Debit interest – calculated daily and will only refresh the transaction if there is no active interest suppression activity on the account, e.g. no Statement of Account has been issued in the last 30 days.
  • Credit interest – no change to how credit interest will update.
  • Late payment penalties and interest amounts will also refresh if backdated activity occurs, for example, a payment with an earlier effective date is posted to or transferred into the account.

What you will see

This change was introduced on 4 May 2022 and applies to all current and future periods with a debit or credit balance. Over the next few weeks, you will see a reduction in transactions being created on the accounts with penalties and interest.

Last updated: 11 May 2022
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