139B Late payment penalty

(1)

This section applies to a taxpayer if and to the extent to which the taxpayer does not pay by the default date an amount of tax (the unpaid tax), calculated by the taxpayer as payable or for which the taxpayer is assessed, and

(a)

the unpaid tax is provisional tax or a penalty relating to a failure to pay provisional tax:

(b)

ignoring any failure to pay for which a penalty or interest is remitted under section 183AA, the Commissioner determines that the taxpayer has failed to pay on time an amount of tax due for payment in the period—

(i)

beginning with the later of 1 April 2008 and the day 2 years before the default date; and

(ii)

ending before the default date:

(c)

ignoring any failure to pay for which a penalty or interest is remitted under section 183AA, the Commissioner determines that the taxpayer has paid on time amounts of tax due for payment in the period referred to in paragraph (b) and—

(i)

the Commissioner gives the taxpayer a notice setting a further date for payment of the unpaid tax; and

(ii)

the taxpayer does not pay the unpaid tax before the date that is the earlier of the further date and the date that is 1 month after the date of the notice.

(1B)

When determining whether a person has paid amounts of tax on time or failed to pay amounts of tax on time under subsection (1)(b) or (c), the Commissioner has a discretion to ignore any failure to pay tax on time for any tax type that the Commissioner decides it is appropriate to ignore. The discretion may only be exercised if—

(a)

it is necessary because of resource constraints imposed on the Commissioner during the period of co-existence of 2 Inland Revenue Department software platforms; and

(b)

it does not impose a penalty greater than that which the person would otherwise be liable for in the absence of this subsection.

(2)

The taxpayer is liable to pay a late payment penalty consisting of—

(a)

an initial late payment penalty equal to the total of—

(i)

1% of the unpaid tax; and

(ii)

4% of the amount of tax to pay at the end of the sixth day after the day on which a penalty under subparagraph (i) is imposed; and

(b)

an incremental late payment penalty equal to 1% of the amount of tax to pay determined on each day that falls 1 month after a day on which a penalty is imposed under—

(i)

this subsection:

(ii)

subsection (2A)(a) or (2B) as they were before the enactment of section 243 of the Taxation (Business Taxation and Remedial Matters) Act 2007.

(2A)

[Repealed]

(2B)

Despite subsection (2)(b), a taxpayer is not liable to pay an incremental late payment penalty to the extent to which the relevant tax to pay is—

(a)

GST for a GST return period ending within 8 days of 31 March 2017:

(b)

GST for a GST return period ending after 31 March 2017:

(c)

provisional tax or income tax for the 2017–18 or later income years:

(d)

described in section MF 5 or MF 6 of the Income Tax Act 2007, or is otherwise the overpayment or over-crediting of WFF tax credits, and relates to the 2017–18 or later income years:

(e)

civil penalties for tax and periods described in paragraphs (a) to (d).

(3)

An initial late payment penalty is added to the unpaid tax to which it relates—

(a)

on the day after the default date for the unpaid tax, if it is imposed under subsection (2)(a)(i):

(b)

at the end of the sixth day after the day referred to in paragraph (a), if it is imposed under subsection (2)(a)(ii).

(3A)

[Repealed]

(3B)

The part of an initial late payment penalty imposed under subsection (2)(a)(ii) is not to be added if the Commissioner has exercised powers available under section 24LC(3) or 157 of this Act or section 43 of the Goods and Services Tax Act 1985 or any similar tax law before the end of the 6th day after the day on which an initial late payment penalty is imposed under subsection (2)(a)(i) and has received the tax withheld or deducted in accordance with the requirements of a notice issued as a result of the Commissioner exercising those powers.

(4)

An incremental late payment penalty is to be added to the tax to pay to which it relates on the day after the last day of successive monthly intervals during which the tax to pay remains unpaid.

(5)

If an incremental late payment penalty would, apart from this subsection, be added to any tax to pay on a date that does not exist in a month, the penalty is to be added to the tax to pay on the last day of the month.

(5A)

An incremental late payment penalty is not to be added if, for a month during which the tax to pay remains unpaid, the Commissioner has exercised powers available under section 24LC(3) or 157 of this Act or section 43 of the Goods and Services Tax Act 1985 or any similar tax law and has received the tax withheld or deducted in accordance with the requirements for the month of a notice issued as a result of the Commissioner exercising those powers.

(5B)

A taxpayer is liable to pay a late payment penalty under subsection (2) in relation to a default date if—

(a)

the Commissioner has given the taxpayer a notice of a further date for the payment of unpaid tax under subsection (1)(c)(i); and

(b)

after giving the notice, the Commissioner becomes aware of a default by the taxpayer that arose before the date of the notice; and

(c)

the further date for payment referred to in paragraph (a)—

(i)

falls outside the period referred to in subsection (1)(b); and

(ii)

should have been given in relation to the default referred to in paragraph (b).

(5C)

If the taxpayer enters into an instalment arrangement for the default under section 177B and a late payment penalty is imposed under section 139BA(1), the taxpayer is treated for the purposes of this section as paying on time, to the extent of the default, the amount of tax due for payment.

(6)

In this section and section 139BA

(aa)

the term default date means, for an amount of tax,—

(i)

its due date; or

(ii)

its collection date, described in section 142A(6), if the amount has a new due date set under section 142A(5):

(a)

the term tax to pay means, at any time, an amount equal to the unpaid tax together with any late payment penalty that has been imposed in whole or in part in respect of the unpaid tax, to the extent that at that time the amount remains unpaid:

(b)

the unpaid tax is deemed to be the last part of any tax to pay that a taxpayer pays:

(bb)

for a person that section 120KBB applies to, the term unpaid tax includes, for a failure to pay 1 or both of the first 2 instalments of provisional tax on the relevant instalment dates for the tax year, the amount of unpaid tax given by section 120KBB(3) for the date:

(c)

the term unpaid tax includes an amount of tax that must be withheld or deducted and paid to the Commissioner under a tax law but does not include a late payment penalty or a shortfall penalty imposed under section 141ED.

Section 139B: inserted, on 26 July 1996, by section 43 of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).

Section 139B(1): replaced, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(1): amended (with effect on 5 February 2017), on 21 February 2017, by section 119(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(1): amended, on 1 April 2016, by section 266 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).

Section 139B(1): amended, on 1 April 2016, by section 201 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section 139B(1)(b): amended (with effect on 5 February 2017), on 21 February 2017, by section 119(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(1)(b): amended (with effect on 1 October 2010), on 21 December 2010, by section 157(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 139B(1)(b): amended, on 1 October 2010, by section 55(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

Section 139B(1)(c): amended (with effect on 5 February 2017), on 21 February 2017, by section 119(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(1)(c): amended (with effect on 1 October 2010), on 21 December 2010, by section 157(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 139B(1)(c): amended, on 1 October 2010, by section 55(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).

Section 139B(1B): inserted (with effect on 5 February 2017), on 21 February 2017, by section 119(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(2): replaced, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(2A): repealed, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(2B): replaced, on 1 April 2017, by section 120(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(3): replaced, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(3A): repealed, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(3B): replaced, on 17 October 2002 (applying on and after 1 December 2002), by section 88(4) of the Taxation (Relief, Refunds and Miscellaneous Provisions) Act 2002 (2002 No 32).

Section 139B(3B): amended, on 1 April 2017, by section 120(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(3B): amended, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(3B): amended, on 1 April 2008 (applying for unpaid tax that on or after 1 April 2008 becomes due for payment), by section 243(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 139B(3B): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 139B(5A): replaced, on 17 October 2002 (applying on and after 1 December 2002), by section 88(6) of the Taxation (Relief, Refunds and Miscellaneous Provisions) Act 2002 (2002 No 32).

Section 139B(5A): amended, on 1 April 2017, by section 120(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(5A): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 139B(5B): inserted (with effect on 1 April 2008), on 6 October 2009 (applying for unpaid tax that becomes due for payment on or after 1 April 2008), by section 672(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section 139B(5C): inserted (with effect on 1 April 2008), on 6 October 2009 (applying for unpaid tax that becomes due for payment on or after 1 April 2008), by section 672(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section 139B(6): amended, on 17 October 2002 (applying on and after 1 December 2002), by section 88(7) of the Taxation (Relief, Refunds and Miscellaneous Provisions) Act 2002 (2002 No 32).

Section 139B(6)(aa): inserted (with effect on 5 February 2017), on 21 February 2017, by section 119(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(6)(bb): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 120(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 139B(6)(c): replaced (with effect on 1 April 2008), on 6 October 2009 (applying for a tax position taken on or after 1 April 2008), by section 672(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).