Penalties and interest

Generally you will be liable for a penalty and/or interest when your tax returns are late or you owe tax. These penalties are imposed by the Revenue Services Administration Act 2002 (RSAA).

Late Lodgment penalties

If you do not give us your tax return as required by the due date or approved extended due date, you will be liable t= o a penalty of $100 plus $10 for each day the return is not given to us.

Late payment penalties

If you owe Inland Revenue any income tax you are required to pay the tax outstanding on or before the 31 October even if you have been granted an extension of time to lodge unless you have also been given an extension of time to pay.

If you do not pay by the due date or extended due date, you will be liable to an administrative penalty of 3% of the amount of unpaid tax plus an additional amount of 5% of the tax that remains unpaid on the 15th day of each month following the due date.

For example, Sione has assessed that he owes $240 income tax for the year. He does not pay this amount even though helodges his return before the 31 October. He will be liable to pay in addition to the $240 outstanding tax another $7.20. If the $240 remains outstanding on the 15th September, he will pay an additional $12. In total $259.20. He will be liable for $12 for each month he has not paid by the 15 of the month.

False or misleading statements

Any person who makes a false or misleading statement or omits from such statement any materials particular which lessens his tax liability shall be liable to a penalty.

Dishonoured cheques

Dishonoured or bounced cheques, if the amount on the cheque is less than $1,000 the penalty will be equal to the amount of the cheque. If its more than $1,000, the penalty will be $1,000.

Interest on late payment of tax

You are liable to pay interest if you have not paid any tax on or before the due date for payment. This is simple interest and is calculated from the date the payment was due to the date the payment is made. Even though you can apply and may be granted an extension of time to pay any tax outstanding, this does not mean that you are not liable to interest for late payment from the original due date for payment. Interest rate is the weighted average lending rate plus 3 percentage points.

Offences and penalties

The following are offences (sections 36 - 46 of the RSAA) and can be prosecuted which may result in fines up to $10,000 and 10 years imprisonment.

• Failure to deliver tax returns

• Failure to comply with  a notice

• Liquidation related offences

• Failure to comply with a temporary close down notice

• Failure to maintain proper records

• Failure to provide assistance

• Failure to provide records or information as requested

• False TIN

• False Statements

• Obstruction

• Abetting

Remission of late payment and late lodgment penalties

You may apply in writing to the Minister of Revenue & Customs for remission of the penalty payable. The Minister  of Revenue & Customs will consider the application and may remit in part of in full any penalty payable by a person. In your letter you should set out the reasons why you believe the penalties should be remitted. You must pay the tax on which the penalties and interest are charged before we can consider the application for remission.

Remission may be allowed if you contact us immediately to advise of an event or circumstance preventing you from meeting your tax obligations. It must be a reasonable event or circumstance which means that it must be reasonable for an average person in the same position not to have complied. Remission may also occur for a genuine error, a one off situation or incorrect advice from us that directly resulted in the  default.

Late payment and late lodgment penalties may be remitted in limited circumstances.

Miscellaneous

Where an administrative penalty has been paid and the Ministry institutes a prosecution in respect of the same act or omission, the Ministry shall refund the amount of penalty paid by the taxpayer OR the penalty becomes payable as soon as the prosecution is withdrawn.

Failure to deliver tax return (section 36)

Any taxpayer who without reasonable cause fails to deliver a tax return by the due date or within such further time as the Chief Commissioner of Revenue may allow under section 4, commits an offence and shall be liable upon conviction to a fine not exceeding $10,000.

Failure to comply with notice (section 37)

Any person who, without reasonable excuse, fails to comply with a notice served on the person under section 15 commits an offence and shall be liable upon conviction to a fine not exceeding $10,000

Failure to comply with section 18 (section 38)

Any liquidator who fails to comply with an order under section 18 commits an offence and shall be liable upon conviction to a fine not exceeding $10,000

Failure to comply with section 19 (section 39)

Any person who fails to comply with an order under section 19(2) or notice under section 19(4) commits an offence and= shall be liable upon conviction to a fine not exceeding $10,000

Failure to maintain proper records (section 40)

Any taxpayer who fails to maintain proper  accounts, documents or records in accordance with the requirements of any revenue law commits an offence and shall be liable upon conviction-

(a) Where the taxpayer knowingly failed to= maintain proper accounts, documents or records, to fine not exceeding $10,= 000 or to imprisonment for a term not exceeding 3 years or both or

(b) in any other case, to a fine not exceeding $5,000

Failure to provide assistance (section 41)

Any person who fails to provide facilities and assistance as required by section 21(4) commits an offence and shall be liable upon conviction to a fine not exceeding $10,000

Failure to comply with a section 22 notice (section 42)

Any person who, without reasonable explanation, fails to comply with a notice under section 22 commits an offence and  shall be liable upon conviction to a fine not exceeding $10,000

False identification number (section 43)

1. Any person who knowingly and fraudulently uses a false Taxpayer Identification Number on any return or document pr= escribe or used for the purposes of any revenue law commits an offence and = shall be liable upon conviction to a fine not exceeding $10,000 or to impri= sonment for a term not exceeding 3 years or both

2. Any person who uses the Taxpayer Identification Number of another person shall be treated as having used a false Taxpayer Identification Number, except where the person has used the Taxpayer Identification Number of another person with permission of that other person on a document relating to the tax affairs of that other person

False statements (section 44)

1. Any person who knowingly makes a false or misleading statement or omits from such statement any material particular commits an offence and shall be liable upon conviction to a fine not exceeding $10,000 or imprisonment for a term not exceeding 3 years or both

2. Section 34(4) shall apply in determining whether a person has made a statement to a taxation officer.

Obstruction (section 45)

Any person who willfully obstructs a taxation officer in the performance of duties under any revenue law commits an offence and shall be liable upon conviction to a fine not exceeding $3,000 or imprisonment for a term not exceeding one year or both

Abetting (section 46)

Any person who aids, abets, assists, incites or induces another person to commit an offence an under any revenue law commits an offence and shall be liable upon conviction to the same penalty as the principal offender

Offences by companies (section 47)
1. Where an offence under any Revenue Law is committed by a company every person who at the time the offence was committed was 

(a) director, principal officer, general manager, secretary or other similar officer of the company or

(b) acting or purporting to act in that capacity

shall be treated as having committed the offence.

2. Subsection (1) shall not apply to a person where-

(a) the offence was committed without that person consent or knowledge; and

(b) the person having regard to the nature of the persons functions and all the circumstances has exercised reasonable diligence to prevent the commission of the offence.

Compound Offences (section 48)

1. The Chief Commissioner of Revenue may, where any person has committed an offence under this Division except under sections 36, 40 or 44, before or after the institution of proceedings, compound such offence and order the person, by notice in writing, to pay the amount specified in the notice and such amount shall not exceed the amount of the maximum fine prescribed for the offence.

2. The Chief Commissioner of Revenue shall compound an offence under this section only if the offender admits in writing that he committed the offence.

3. Where the Chief Commissioner of Revenue compounds an offence under this section, the notice shall 

(a) Specify the offence committed, the sum of money to be paid and the due date for payment;
(b) Have a copy of the written admission attached;
(c) Be served on the offender;
(d) Be final and not subject to any appeal.

4. Where the Chief Commissioner of Revenue compounds an offence under this section, the offender shall not be liable  for prosecution or penalty in respect of that offence.

Limitation of action

The prosecution of an offence under this division may be instituted at any time within 5 years after the commission of the offence.