These regulations, which come into force on 9 April 2020, change the setting process for the Commissioner’s paying rate, which is the rate of interest payable on overpaid tax.

The setting process as prescribed in 1997 is that the rate will be set at the Reserve Bank of New Zealand 90-day bank bill rate less 100 basis points. These regulations amend the setting process to specify a floor of 0%. This prevents the Commissioner’s paying rate from being set at a negative rate if the 90-day bank bill rate drops below 1%.

These regulations also make technical changes to the setting process for the taxpayer’s paying rate, which is the rate of interest payable on unpaid tax.

Section 120H of the Tax Administration Act 1994 provides that Orders in Council may be made to—

• specify the criteria and other requirements by and against which interest rates will be set or reset and notified for the purposes of Part 7 of that Act. These regulations are made under that provision:

• set the Commissioner’s paying rate and taxpayer’s paying rate. The actual rates are specified in the Taxation (Use of Money Interest Rates) Regulations 1998.