Interest and penalty tax is applied to taxpayers who commit a tax default under various taxation and revenue laws we administer.
A taxpayer commits a tax default by:
The rates of interest and penalty tax vary, depending on the circumstance of the tax default.
The level of interest and penalty tax applied should match the degree of culpability of the taxpayer. For example, taxpayers who exercise reasonable care and voluntarily disclose their tax liability, as soon as they know, will have less interest and/or penalty tax imposed than those who do not.
Interest is calculated daily, from the end of the day on which the tax should have been paid until the day on which the tax is paid.
Interest is not calculated on unpaid interest – and is not payable if the amount of interest is less than $20.
There are two components of interest:
The rate of interest imposed for the past 5 years.
|Period||Market rate||Premium rate||Total rate of interest|
|01/10/2020 to 31/12/2020||0.10%||8%||8.10%|
|01/07/2020 to 30/09/2020||0.10%||8%||8.10%|
|01/04/2020 to 30/06/2020||0.89%||8%||8.89%|
|01/01/2020 to 30/03/2020||0.91%||8%||8.91%|
|01/10/2019 to 31/12/2019||0.98%||8%||8.98%|
|01/07/2019 to 30/09/2019||1.54%||8%||9.54%|
|01/04/2019 to 30/06/2019||1.96%||8%||9.96%|
|01/01/2019 to 30/03/2019||1.94%||8%||9.94%|
|01/10/2018 to 31/12/2018||1.96%||8%||9.96%|
|01/07/2018 to 30/09/2018||1.96%||8%||9.96%|
|01/04/2018 to 30/06/2018||1.77%||8%||9.77%|
|01/01/2018 to 31/03/2018||1.72%||8%||9.72%|
|01/10/2017 to 31/12/2017||1.70%||8%||9.70%|
|01/07/2017 to 30/09/2017||1.73%||8%||9.73%|
|01/04/2017 to 30/06/2017||1.78%||8%||9.78%|
|01/01/2017 to 31/03/2017||1.76%||8%||9.76%|
|01/10/2016 to 31/12/2016||1.76%||8%||9.76%|
|01/07/2016 to 30/09/2016||2.01%||8%||10.01%|
|01/04/2016 to 30/06/2016||2.28%||8%||10.28%|
|01/01/2016 to 31/03/2016||2.22%||8%||10.22%|
|01/10/2015 to 31/12/2015||2.14%||8%||10.14%|
|01/07/2015 to 30/09/2015||2.15%||8%||10.15%|
|01/04/2015 to 30/06/2015||2.36%||8%||10.36%|
|01/01/2015 to 31/03/2015||2.75%||8%||10.75%|
We can reduce the interest by any amount.
We may reduce the market and premium rate if there is evidence that the tax default was beyond your control. For example, postal and DX delays, natural disasters, and circumstances where it’s impossible to submit a return or pay on time (excluding financial incapacity).
The premium rate of interest may be reduced if there is evidence you took reasonable care, or made a voluntary disclosure before the commencement of an investigation. However, for the purposes of payroll tax, the premium rate of interest is not reduced. Please refer to revenue ruling PTA 036v3 for application of the interest and penalty provisions for payroll tax.
Write to us to request a reduction. It should detail the circumstances surrounding the default and reasons why the interest should be reduced.
When determining whether reasonable care was taken, we’ll consider whether you:
We’ll also consider your:
Meeting one or more of these criteria does not necessarily mean that reasonable care has been taken. All factors leading to the tax default are taken into consideration.
If a tax default occurs, a penalty tax may be payable.
A penalty tax is not imposed on interest or on any penalty tax already imposed. The penalty tax will be:
Where reasonable care is not taken but no intentional disregard of the law.
|20%||if a voluntary disclosure is made in writing during an investigation|
|25%||if a voluntary disclosure is made after an investigation|
|30%||If you take steps to hinder the Chief Commissioner's investigation after being advised that an investigation is to be carried out|
Where there is intentional disregard of the law.
|15%||if a voluntary disclosure is made in writing before an investigation has commenced|
|60%||if a voluntary disclosure is made during an investigation|
|75%||If a voluntary disclosure is not made|
|90%||If you take steps to hinder the Chief Commissioner's investigation after being advised that an investigation is to be carried out|
No penalty tax will be imposed where a voluntary disclosure is made in writing before the commencement of an investigation, unless there is intentional disregard of the law.
You are entitled to a reduction in penalty tax if you voluntarily make a written disclosure that enables the Chief Commissioner to determine the nature and extent of the tax default.
The rate of penalty tax is reduced by 80 per cent if the written disclosure is made before the Chief Commissioner commences an investigation, and by 20 per cent if it is made after the Chief Commissioner commences an investigation.
This does not apply to registered taxpayers if a voluntary disclosure is made after a failure to lodge a return or pay tax in accordance with the relevant legislation.
To get the penalty tax reduced, write to us outlining reasons why.
You intentionally disregard of the law when you:
If you owe money and are unable to pay the amount in full, we will negotiate an appropriate payment arrangement.
For short-term payment arrangements, write to us with your financial information (including detailed cash flow projections).
If you’re not satisfied with our assessment, you can lodge a written objection with 60 days. If still dissatisfied, you can seek a further review via the NSW Civil and Administrative Tribunal (NCAT) or the NSW Supreme Court.