In a time when business confidence surveys are at a 10 year low, and economists have indicated two further official cash rate reductions are imminent, the Inland Revenue has announced an increase to their “use of money interest” rate. Although the IRD have always stated the use of money interest is not a penalty, clearly most will see these rates as such, given they are vastly different than market interest rates.
In the amendment announced yesterday, the key details were:
- An increase for taxpayer’s paying rate of interest on unpaid tax from 8.22% to 8.35% per annum, and
- A decrease of the Commissioner’s paying rate of interest on overpaid tax from 1.02% to 0.81% per annum.
These changes will take effect from 29 August 2019.
If you have any questions on what this means for your business and what you can do to help mitigate this cost, please speak to one of the team at Hayes Knight.