(Clause 114) Summary of proposed amendment The proposed amendment specifies that Inland Revenue will no longer impose a 1% monthly incremental late payment penalty on unpaid tax from Goods and Services Tax (GST), income tax and Working for Families tax credits overpayment. This amendment states that this will only apply to future tax periods. Application date The amendment will come into force on 1 April 2017. Key features Proposed section 139B(2) of the Tax Administration Act 1994 provides that a taxpayer that does not pay by the due date an amount of tax, would no longer incur the 1% incremental late payment penalty, if the unpaid tax resides in one of the described tax periods. If the unpaid tax liability does not reside in one of the described tax periods, there would be no change and the taxpayer would continue to incur the incremental late payment penalty as imposed by the current rules. This amendment identifies the relevant tax types and tax periods as follows: GST tax periods ending after the 24 March 2017; provisional tax and income tax for the 2017–18 or later income years; and Working for Families tax credit overpayments for the 2017–18 or later income years. Most taxpayers have a GST taxable period that ends on the last day of a month. However, under section 15E(2) of the Goods and Services Tax Act 1985, some taxpayers may be approved by the Commissioner to have a GST taxable period that may end up to seven days before or after the last day of the month. The proposed amendment looks to include taxpayers that have a GST taxable period that may end up to seven days before 31 March 2017. This is to ensure that these taxpayers benefit from this amendment.
(Clause 114) Summary of proposed amendment The proposed amendment specifies that Inland Revenue will no longer impose a 1% monthly incremental late payment penalty on unpaid tax from Goods and Services Tax (GST), income tax and Working for Families tax credits overpayment. This amendment states that this will only apply to future tax periods. Application date The amendment will come into force on 1 April 2017. Key features Proposed section 139B(2) of the Tax Administration Act 1994 provides that a taxpayer that does not pay by the due date an amount of tax, would no longer incur the 1% incremental late payment penalty, if the unpaid tax resides in one of the described tax periods. If the unpaid tax liability does not reside in one of the described tax periods, there would be no change and the taxpayer would continue to incur the incremental late payment penalty as imposed by the current rules. This amendment identifies the relevant tax types and tax periods as follows: GST tax periods ending after the 24 March 2017; provisional tax and income tax for the 2017–18 or later income years; and Working for Families tax credit overpayments for the 2017–18 or later income years. Most taxpayers have a GST taxable period that ends on the last day of a month. However, under section 15E(2) of the Goods and Services Tax Act 1985, some taxpayers may be approved by the Commissioner to have a GST taxable period that may end up to seven days before or after the last day of the month. The proposed amendment looks to include taxpayers that have a GST taxable period that may end up to seven days before 31 March 2017. This is to ensure that these taxpayers benefit from this amendment.