It’s quite amazing to me that so many business owners voluntary pay extra to the IRD. They moan about their Income Tax and hate paying their GST, yet then choose to pay more they then they need. How weird is that?
What I’m talking about is penalties for late payment. If you pay tax late, as sure as night follows day, you’ll incur late payment penalties. If you’re a day late, you pay a 1% penalty. 7 days late, a 4% penalty, and then a further monthly penalty of 1% if the tax remains outstanding. Use of money interest (UOMI) will also apply to amounts over $100. UOMI is currently calculated daily at 8.40%.
Here are a couple of actual examples of how the penalties and interest ratchet up so rapidly:
GST for period 31 July 2010
GST originally due $3,500.70
Amount now due with penalties and interest $5,555.
PAYE for period 30 November 2010
PAYE originally due $4,239.83
Amount now due with penalties and interest $5,722.
GST for period 28 Feb 2011
GST originally due $1,068.72
Amount now due with penalties and interest $1,988.
See what I mean? Truly an exorbitant, gouging overall finance rate, the sort of rate charged by dodgy loan sharks! And often, it’s not that taxpayers lack the money, it’s just lack of organisation and lack of planning in advance. What a waste of money!
If you need help to sort your finances out, contact Nick on 0800 ASK NICK or email@example.com.