Missing an IRD tax deadline triggers penalties and interest that compound quickly. Understanding the penalty structure helps you act fast — and there are options to minimise the damage if you cannot pay in full.
Filing late triggers a $50–$250 penalty immediately. Not paying on time adds 1% of the unpaid tax on day 1, 4% more after 7 days, then 1% per month ongoing. Use-of-money interest (currently around 10.9% p.a.) also accrues on unpaid amounts. File your return even if you cannot pay — penalties are lower. Contact IRD to arrange a payment plan before the due date if possible.
Late Filing Penalties
A late filing penalty is charged when you do not file your return by the due date. The penalty depends on the type of return:
| Return type | Late filing penalty |
|---|---|
| IR3 (individual income tax) | $50 |
| GST return | $50 |
| Employer monthly schedule / EI | $250 per return |
| IR10 (financial statements) | $250 |
Note: The late filing penalty for IR3 is only $50 — but this is on top of any late payment penalties on tax owed.
Late Payment Penalties
Late payment penalties are based on the amount of unpaid tax (not including penalties already charged):
| When charged | Penalty |
|---|---|
| Day 1 after due date | 1% of unpaid tax |
| Day 7 after due date | Additional 4% of remaining unpaid tax |
| Each subsequent month | Additional 1% per month on remaining balance |
Example: $5,000 of income tax unpaid:
- Day 1: 1% × $5,000 = $50 penalty → balance $5,050
- Day 7: 4% × $5,050 = $202 → balance $5,252
- Month 2: 1% × $5,252 = $52.52 → balance $5,304.52
- And continuing each month…
Use-of-Money Interest (UOMI)
On top of late payment penalties, IRD charges use-of-money interest (UOMI) on unpaid tax. UOMI is:
- Currently around 10.9% per annum (subject to change)
- Applied daily on unpaid balances
- Charged from the due date until the debt is paid in full
UOMI is different from penalties — it is a charge for the time value of unpaid tax. Both penalties and UOMI apply simultaneously.
Filing Without Paying
Critical rule: Always file your return on time, even if you cannot pay.
Filing on time avoids the late filing penalty ($50–$250) and shows IRD you are engaging. You can then contact IRD to discuss payment arrangements.
If you both miss the filing deadline and do not pay:
- Late filing penalty applies
- Late payment penalties apply
- UOMI applies
- IRD may issue a default assessment (arbitrary amount they estimate you owe — often higher than actual)
Due Dates to Know
| Tax type / situation | Due date |
|---|---|
| IR3 (no tax agent) | 7 July |
| IR3 (with registered tax agent) | 31 March of following year |
| Provisional tax — 3 instalments (standard uplift) | August, January, May (varies by year start) |
| GST (2-monthly) | 28th of month following period end |
| FBT (annual small employer) | 31 May |
What to Do If You Are Late
Step 1: File Immediately
File the overdue return right away through myIR. Stopping the filing clock limits the late filing penalty to a one-off charge.
Step 2: Pay What You Can
Pay whatever you can immediately to reduce the base on which monthly penalties and interest accrue. Even partial payment significantly reduces ongoing costs.
Step 3: Contact IRD
Call IRD on 0800 227 774 (general tax enquiries) or use myIR’s messaging feature to request a payment plan. IRD is generally willing to set up installment arrangements — they prefer receiving the money over time to not receiving it at all.
Step 4: Consider Voluntary Disclosure
If you have unreported income (not just missed filing dates), voluntary disclosure reduces penalties significantly. IRD’s standard practice is to reduce shortfall penalties by 75–100% for voluntary disclosures before an audit.
Payment Plans (Instalment Arrangements)
IRD will consider a payment plan if you:
- Owe tax you cannot pay immediately
- Contact them proactively (ideally before the due date)
- Have a reasonable history of compliance
To set up a plan:
- Log in to myIR → Manage payment → Set up an instalment arrangement
- Or call IRD: 0800 227 774
Payment plans do not stop UOMI accruing on unpaid balances, but they prevent additional late payment penalties while the plan is in place and adhered to.
Frequently Asked Questions
I owe $800 in tax and cannot pay. Will IRD sue me?
IRD pursues debt collection, but for amounts under $100,000, they typically send warnings and letters before taking legal action. Contact IRD proactively — most issues are resolved with payment plans. Ignoring IRD makes things significantly worse.
I missed the 7 July deadline for my IR3. What do I do?
File immediately through myIR — even a few days late is much better than months late. Pay the $50 late filing penalty and whatever tax is owed (or contact IRD if you cannot pay in full). The sooner you file, the sooner you stop the late payment penalty clock.
Can I get the late filing penalty waived?
IRD has discretion to remit penalties in genuine cases of hardship, serious illness, or natural disaster. Apply through myIR (Manage → Request penalty remission) or by writing to IRD. A genuine reason and a clean prior compliance history improve your chances.
Does a payment plan stop all penalties?
A payment plan stops further late payment penalties from accruing if you adhere to the plan. However, use-of-money interest continues to accrue on the remaining balance until it is fully paid.