Late filing penalties for GST returns
2007 legislation introduces a late filing penalty for GST returns that are not filed by the due date.
Sections 139AAA, 142(1) and 142(1B) of the Tax Administration Act 1994
A late filing penalty has been introduced for GST returns that are not filed by the due date.
Previously, when taxpayers failed to file their GST returns, Inland Revenue issued a default assessment. A default assessment is an estimation of tax liability and remains in place until the taxpayer files the return. A default assessment is likely to present a slightly larger debt than a self-assessment as it is intended to encourage taxpayers to file their returns.
The discussion document, Tax penalties, tax agents and disclosures, noted that the default assessment is in many cases an excessive response to non-filing and that imposing a late filing penalty is a more appropriate response, with the default assessment reserved for significant or ongoing non-compliance.
As is the practice in relation to late filed employer monthly schedules, the first time a GST return is filed late Inland Revenue will advise the taxpayer that the return is late and warn that subsequent breaches will be penalised. A late filing penalty will be payable if any GST returns are filed late in the 12 months following the first breach. If all returns are filed on time for a year, the process will start again - that is, if a subsequent return is late, the taxpayer will be warned.
The amendment applies to tax positions taken on or after 1 April 2008.