This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, which come into force immediately, change the setting process for the taxpayer’s paying rate, which is the rate payable on unpaid tax.

The change in the setting process is being made because of the current economic climate, and may be reviewed later.

The setting process as prescribed in 1997 is that the rate must be set at the Reserve Bank of New Zealand business base lending rate series plus 200 basis points.

The new setting process is that the rate must be set at the 90-day bank bill rate plus 450 basis points.

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.