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:
- A shortfall penalty where the correct amount of tax is higher than the amount you paid ( eg, because of an understatement of tax, or where the amount of a refund or loss is reduced).
- A late payment penalty if you post or deliver a payment to us after the date it was due.
- A late filing penalty if you do not file a return by the due date.
- Interest on the amount of tax you owe if you have underpaid your tax. The interest rates charged are based on market rates.
For more information refer to the IRD's Taxpayer handbook.