Provisional Tax and remission of Use of Money Interest (UOMI)

 

 

The Government recently introduced a power to enable the Commissioner of Inland Revenue to remit UOMI where a taxpayer has been adversely affected by COVID-19. However, the provision may not be working as intended for taxpayers who make an underpayment of a provisional tax instalment due to COVID-19 related difficulties in accurately forecasting income.
The amendment allows Inland Revenue to remit UOMI accrued on an amount of terminal tax payable for the 2020-21 tax year where the taxpayer failed to pay the relevant portions of the amount by the provisional tax dates as a consequence of their ability to reasonably accurately forecast their residual income tax which has been significantly adversely affected by COVID-19. This amendment applies from the date of Royal Assent; 6th August 2020. 

Source:  IRD Issue No. 21
Further information is available on the IRD website: https://www.ird.govt.nz/covid-19