Due date for payment of tax

Section 142A of the Tax Administration Act 1994

Section 142A has been amended to allow a new due date to be set irrespective of whether a return has been filed.

Background

Under section 142A, if the Commissioner increases an assessment (for example, following an audit of the taxpayer), the increased amount of tax and any shortfall penalty has a new due date for payment set. However, before the amendment, if there was no assessment of tax (because the taxpayer did not, or was not required to file a return) and Inland Revenue assessed tax, the increased amount of tax did not have a new due date for payment set. This could have resulted in both late payment penalties and shortfall penalties being imposed.

Key features

Section 142A has been amended to require the Commissioner to set a new due date for payment irrespective of whether the return has been filed.

The amendment ensures that when the taxpayer is not required to file a return (and is not self-assessing a liability, as may be the case with non-resident withholding tax) a new due date can be set so that the late payment penalty is not inappropriately applied.

When the taxpayer is required to file a return (and self-assess) but fails to do so, the amendment also provides for a new due date to be set, although the filing penalty may be incurred.

Application date

The amendment applies from 1 April 2008.