fbpx

IRD Interest on tax overpayments and underpayments (UOMI) increase

IRD Interest on tax overpayments and underpayments (UOMI) increase

If you overpay any tax the IRD pay you back with interest. If you underpay tax, the IRD charge you interest. The IRD may also charge a penalty with interest. This is often called use of money interest, or UOMI.

If your ability to make a tax payment on time has been affected by COVID-19, the IRD may be able to write off use-of-money interest.

Thee UOMI increased to 7.28% on 10 May 2022

Interest amounts

Interest gets calculated daily on your overpaid or underpaid tax. It does not compound and is not included when calculating penalties.

The interest rates are set by government and are based on market rates, so they vary over time.

When interest rate startedDebit rateCredit rate
10 May 20227.28%0.00%
8 May 20207.00%0.00%
29 August 20198.35%0.81%
8 May 20178.22%1.02%
8 May 20168.27%1.62%
8 May 20159.21%2.63%

When interest starts:

If you’ve underpaid tax, interest:

  • starts on the day after the original due date for the amount owing, or
  • stops on the day the overdue balance (including interest) gets paid in full.

If you need to file a tax return to get a refund of your overpayment, interest starts on the latest of the:

  • original due date
  • day after the payment that generates the refund (that’s when the credit becomes available)
  • date you filed your return.

In most cases, interest stops the day the overpaid tax is refunded or transferred to another tax account or period.

https://www.ird.govt.nz/managing-my-tax/penalties-and-interest/interest-on-overpayments-and-underpayments