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Tax Facts - Taxpayer Penalties

Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid such charges, you should pay the full amount of tax you owe by the due date.

The main kinds of charges for failing to meet tax obligations are:

  • Interest on the amount of tax you owe if you have underpaid your tax. The interest rates charged are based with reference to market rates.
  • late filing penalty if you do not file a return by the due date.
  • late payment penalty if a payment is not received by the IRD by the date it was due.
  • shortfall penalty where the correct amount of tax is higher than the amount you paid (for example, because of an understatement of tax, or where the amount of a refund or loss is reduced). These penalties can be as high as 150% (for evasion) and may include imprisonment for serious instances of evasion.
  • Penalties for employment information. If you file employment information but do not pay the correct amount of PAYE, you may have to pay:
    • a non-payment penalty
    • late payment penalties and interest.

The non-payment penalty is 10% of the overdue amount. If you still do not pay, another 10% penalty will be added each month an amount remains unpaid. When you pay the unpaid amount or enter into an instalment arrangement, the last 10% penalty given will reduce to 5%.

Solutions such as tax pooling can also be used to manage tax and limit exposure to penalties and use of money interest.

The IRD has discretion to remit interest and penalties where COVID-19 has affected income and a remittance request has been made.

For more information about managing tax, give us a call.  For more information about tax penalties refer to the IRD's Penalties and interest guide.

Supplied by CCH Business Fitness NZ

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The majority of their work is tree and garden maintenance of private clients and large infrastructure clients...

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What our clients say...

  • Parihohonu Station has been involved with Graham and Dobson since the early 1900s. They have proved to be of great value, producing a high standard of quality work, are trustworthy, astute, and approachable any time at all. The staff are very friendly and will bend over backwards for us. We always recommend this long established firm unequivocally.

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  • We are grateful for the enormous amount of support the staff of Graham & Dobson provide. They have demonstrated a high level of understanding, knowledge and financial direction and deliver a consistent service in structured, efficient timeframes. This is a company with high integrity and strong values focusing on providing the utmost levels of customer satisfaction.

    Gisborne Stroke Support Group Inc.

  • Graham & Dobson helped me start my own business in 2007. Without their help and support the process would have been a lot harder. They offer excellent on-going support and advice.

    Karl Platten - Lawns Plus Ltd (GreenAcres)