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Tax Administration Act 1994

Interest

120A: Purpose of this Part and nature of interest

You could also call this:

"Getting back the right amount of tax with interest"

Illustration for Tax Administration Act 1994

The purpose of this part of the law is to help the Commissioner get back money they lost because taxpayers paid too little tax, and to help taxpayers get back money they lost because they paid too much tax. You will also get interest if you pay too much tax, and the Commissioner will get interest if you pay too little tax. The interest is not a penalty, it is just to make up for the lost money. When the Commissioner pays you interest, they might take out some tax first, so you get the amount left after tax. The interest you get is the amount after the Commissioner takes out tax, like RWT or NRWT, from the interest payment.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM354989.

Topics:
Money and consumer rights > Taxes
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"The government doesn't pay interest on extra tax you paid."

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"When old tax rules still apply to you"

Part 7Interest

120APurpose of this Part and nature of interest

  1. The purpose of this Part is—

  2. in appropriate circumstances—
    1. to compensate the Commissioner for the loss of use of money through taxpayers paying too little tax; and
      1. to compensate taxpayers for the loss of use of money through their paying too much tax; and
      2. to encourage taxpayers to pay the correct amount of tax on time.

        1. Interest payable under this Part is not a penalty.

        2. Where the Commissioner withholds RWT or NRWT from an interest payment, the interest paid to a taxpayer under this Part is the net amount.

        Notes
        • Section 120A: inserted, on , by section 36(1) of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).
        • Section 120A(3): amended, on (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).