IRD Penalties and Interest Calculator NZ

This calculator estimates the cost of paying tax late to Inland Revenue in New Zealand, combining the late payment penalties with use-of-money interest so you can see what a missed due date really adds up to. Paying tax late is more expensive than many people expect, because two separate charges stack on top of the tax you already owe. The late payment penalty is charged in steps: commonly one percent of the unpaid tax the day after the due date, and a further four percent if it is still unpaid after a week, so a short delay can cost five percent of the tax straight away. On top of that, use-of-money interest accrues daily on the overdue amount at a rate IRD sets and reviews periodically, usually higher than bank interest, so the longer the tax sits unpaid the more it costs. You enter the tax owed, how many days it is overdue, and the current use-of-money interest rate, and the calculator works out the penalties, the interest, and the total cost on top of the tax. Use it to understand the cost of delay and the value of paying on time or arranging an instalment plan early. Penalties can sometimes be remitted, and the UOMI rate changes, so treat this as an estimate and contact IRD if you cannot pay. General information, not tax advice.

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$295
extra cost on top of the tax owed
Late payment penalties$250
Use-of-money interest$45

Penalties shown as 1% then a further 4% after 7 days; UOMI accrues daily. Rates and rules change and penalties may be remitted. Estimate only, contact IRD if you cannot pay.

How it works

The penalties are 1 percent of the tax if it is at least one day late, plus a further 4 percent if it is still unpaid after 7 days, so up to 5 percent in total. The use-of-money interest is the tax owed times the UOMI rate, scaled for the days overdue (days divided by 365). The total extra cost is the penalties plus the interest.

Worked example

On 5,000 dollars of tax 30 days overdue, the penalties are 1 percent (50 dollars) plus 4 percent (200 dollars), so 250 dollars. UOMI at 10.88 percent for 30 days adds about 45 dollars, for a total extra cost of about 295 dollars.

Related calculators

Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

What happens if I pay tax late in New Zealand?

Inland Revenue charges a late payment penalty, commonly 1 percent the day after the due date and a further 4 percent if the tax is still unpaid after a week, plus use-of-money interest on the overdue amount until it is paid.

What is use-of-money interest?

Use-of-money interest, or UOMI, is interest IRD charges on tax paid late, set at a rate that changes from time to time and is usually higher than bank interest. It accrues daily on the unpaid balance, so the longer you take, the more it costs.

Can penalties be reduced?

IRD can remit penalties in some circumstances and offers instalment arrangements. Paying as soon as possible, or arranging to pay, limits the cost. This tool gives an estimate; contact IRD if you cannot pay on time.