Missed an IRD due date? Here's what actually happens

A missed due date feels worse than it usually is. The costs are defined, they accrue in a known order, and every one of them responds to the same move: act now rather than after the next letter. This guide covers what a missed payment and a missed return each actually cost, and the two things worth doing today.

Missed a payment

Three meters can run, and they're all knowable:

• 1% the day after the due date, on the unpaid amount.
• 4% more at seven days, on whatever is still unpaid (penalties included). After that, for income tax and GST, the penalty stops growing: the old 1%-per-month escalation no longer applies to them.
• Interest(use-of-money interest, 8.97% a year at the time of writing) runs daily on the unpaid tax until it's cleared. The interest guide has the full mechanics.

So a $10,000 GST payment that's a month late costs roughly $500 in penalties plus about $75 of interest: real money, not a catastrophe. The arithmetic is worth doing because panic-driven decisions (like paying tax with high-interest debt) can cost more than the meter you're escaping.

Missed a return

Late filing has its own, separate penalties, and they're modest: for an income tax return, $50 where net income is under $100,000 (rising to $250 up to $1 million and $500 above); for a GST return, $50 on the payments basis or $250 on the invoice or hybrid basis. The first late return typically draws a warning letter rather than a penalty.

The real cost of an unfiled return isn't the fee, it's the blindness: until you file, neither you nor Inland Revenue knows what you owe, interest may be accruing on an unpaid amount you haven't measured, and unfiled periods stack. File even when you can't pay; the two problems are priced separately, and the filing one is cheaper.

The two moves that limit everything

• Pay or file what you can, today. Every penalty and interest calculation runs on the unpaid balance; anything you clear now stops costing from now.
• Contact Inland Revenue before they contact you. Instalment arrangements exist for exactly this, and the posture of the conversation is different when you start it. Set it up in myIR or by phone, propose something you can actually keep, and keep it.

Making it the last one

Missed dates are almost always a visibility problem or a money problem. The visibility fix is knowing the dates (this year's calendar); the money fix is the set-aside habit, which turns every due date into a transfer instead of a scramble.

How Coffer helps

Coffer attacks both halves: due dates sit on your dashboard with countdowns matched to your filing setup, and the money for each of them is ringfenced from your invoices as they're paid, so the date arriving and the money being ready are the same event.