Do you file and pay all of your GST, PAYE and FBT returns electronically?
If not, to encourage you to do so, Inland Revenue are changing the long-standing practice of treating payments as being received on the date the envelope is postmarked to when they arrive at the IRD. The proposed changes mean payments by post will need to be received by Inland Revenue on or before the due date to be considered ‘in time’.
This means that you will need to take into account possible postage delays as you can no longer rely on putting an envelope into the post box on the day the payment is due. This combined with NZ Post’s proposed change to a three-day postal service will add a fair bit of uncertainty to posting anything to Inland Revenue. How many days before the due date would you need to send your payment to be completely confident it will get there on time?
What does this mean if you get it wrong?
- Use of Money Interest (currently 8.4%) is charged on any amount not paid by due date
- An initial 1% late payment penalty will be charged on the day after the due date
- A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date.
- Every month the amount owing remains unpaid, a further 1% incremental penalty will be added.
- Late filing penalties ranging from $50 to $250 can be imposed if a return isn’t received by the due date, although these will not be imposed if you haven’t had any other late payments in the prior two years.
For return dates that fall a weekend or Public Holiday the status quo will remain and these will still need to be received by the next working day. Although IRD are proposing to change this rule for provincial anniversary days so that returns and payments need to be received on or before the anniversary day.
All of the returns and most of the payments we process for you as your tax agent are done electronically so there will be no change to the timing of our processes. For clients still making cheque payments we will be in touch with you about what needs to happen.
These changes are proposed to apply from 1st October 2014. So if you are currently using the post for the filing of any returns you will either need to start posting them earlier or move to electronic filing.
Most returns can be filed electronically through the IRD website and most banks have a section for making IRD payments readily available in their internet banking. If you have any queries about electronic filing or payments give us a call and we can help you through the process.
We will continue to give you as much notice as possible regarding your returns but if you are ever unsure about when they are due, have any issues with making a payment or have any outstanding amounts due give us a call and we will help you out.