Missed an IRD due date? What it costs and what to do

Missing an IRD due date feels worse than it actually is. The costs are fixed, they add up in a known order, and the same thing fixes all of them: sort it now, not after the next letter turns up. This guide walks through what a late payment and a late return each cost you, and the two things to do today.

If you missed a payment

This is how IRD can start charging you:

• 1% the day after the due date, on the unpaid amount.
• 4% more at seven days, on whatever's still unpaid, including the penalties. After that the penalty stops growing for income tax and GST, because the old 1%-a-month top-up doesn't apply to them anymore.
• Interest, called use-of-money interest and currently 8.97% a year, runs every day on the unpaid tax until you clear it. The interest guide has the full mechanics.

So a $10,000 GST payment that's a month late costs you about $500 in penalties plus around $75 of interest. That's a real cost, so work out the number before you do anything. Panicking and clearing the tax with something like a high-interest loan can cost you more than the penalty did.

If you missed a return

Late filing has its own separate penalties, and they're small. For an income tax return it's $50 if your net income is under $100,000, $250 up to $1 million, and $500 above that. For a GST return it's $50 on the payments basis or $250 on the invoice or hybrid basis. Your first late return usually gets a warning letter, not a penalty.

The real cost of not filing isn't the fee, it's not knowing where you stand. Until you file, neither you nor Inland Revenue knows what you owe, interest might be building on an amount you haven't even worked out, and the unfiled periods pile up. File even if you can't pay. The two problems are priced separately, and filing is the cheap one.

What to do right now

• Pay or file what you can, today. Every penalty and interest calculation runs on the unpaid balance, so anything you clear now stops costing you from now on.
• Contact Inland Revenue before they contact you. Instalment arrangements exist for exactly this, and the conversation goes better when you're the one who starts it. Set one up in myIR or over the phone. Offer something you can actually stick to, then stick to it.

Stop it happening again

Missed dates almost always come down to one of two things: you didn't see the date coming, or you didn't have the money. If it's the first, the fix is knowing the dates, which are in this year's calendar. If it's the second, the fix is the set-aside habit, which turns every due date into a transfer instead of a scramble.

How Coffer helps

Coffer helps with both halves. Your due dates sit on the dashboard with countdowns matched to your filing setup. The money for each one is ringfenced out of your invoices as they're paid, so the cash is ready by the time the date arrives.