Some interest rates are going up 13 Nov 2019

If you underpay your tax you will be charged 8.35% (was 8.22%) interest compounding monthly. This new rate was introduced on 29 August 2019.

At the same time, the rate payable to those who have overpaid was decreased from 1.02% to 0.81%. IRD says the new rates are consistent with the floating first mortgage new customer housing rate and the 90-day bank bill rate.

Those who have an annual tax bill of $60,000 or more should beware of this Use of Money Interest (UOMI) charge and aim to minimise it. If you have a 31 March balance date (most people) and if you pay your provisional tax in accordance with the amount calculated by Inland Revenue (5% more than last year for those who have got their accounts done or 10% more than the year before for those who have not got their accounts done), you will not be bothered with UOMI for your first (28 August) and second (15 January) instalments of provisional tax. However, you will get caught if your third instalment of provisional tax is not sufficient (see below) by 7 May.

As we mentioned in the autumn 2019 newsletter, Inland Revenue expects you to be able to work out your income for the year ending 31 March 2020 by 7 May 2020. Therefore, if your tax for the year is likely to exceed $60,000, make a best guess at your income for the year ending 31 March 2020 within the five weeks allowed and if necessary, top up your 7 May payment.

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