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Yes Please I Want To Pay More to the IRD

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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 2014

GST originally due $3,500.70

Amount now due with penalties and interest $5,555.

PAYE for period 30 November 2013

PAYE originally due $4,239.83

Amount now due with penalties and interest $5,722.

GST for period 28 Feb 2013

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 nick@abac.co.nz.

2 Responses to Yes Please I Want To Pay More to the IRD

  1. Or talking to Accountancy & Business Advice Centre (me).

  2. Liz Taylor says:

    Totally agree Nick. It’s worth remembering that if you are going to be late paying your provisional tax (or need to top up) that you can eliminate those late payment penalties and reduce the interest by using a IRD approved tax pool such as Tax Management NZ. They have clients who have paid tax at the dates you were due to who will sell their excess payments. Win/Win.