Interest and penalties
Interest
There are two components of the interest rate imposed by the Taxation Administration Act 1996.
The market rate, which is updated quarterly and is based on the last monthly 90 day accepted bill rate published by the Reserve Bank before the start of each quarter. The market rate is not regarded as a penalty but reflects revenue lost by the Government as a result of a tax default, and
The premium rate, which is the component imposed where a tax default is as a result of the taxpayer’s failure to take reasonable care. The premium rate is imposed to deter non compliance and ensure that defaulting taxpayers are not advantaged when compared to taxpayers who meet their State taxation obligations.
The two interest rate components are added together to calculate the interest rate payable in a particular tax default.
Penalties
Penalty tax can be imposed in addition to interest when a taxpayer fails to take reasonable care to comply within a taxation law.
This table outline rates of penalty tax which may be imposed if taxes are not paid on time.
| Penalty category | Failure to take reasonable care but no intentional disregard of the law | Intentional disregard of the law |
|---|---|---|
The prime rate is a % of the tax outstanding | 25% | 75% |
Voluntary disclosure before investigation remark* | 5% | 15% |
Voluntary disclosure during investigation remark* | 20% | 60% |
Concealment or hindrance in establishing underpayment remark* | 30% | 90% |
*These special rates reflect a reduction or increase where particular circumstances exist.
Our compliance program generates most of the assessments that incur interest and/or penalty. Find out more about our compliance program.
