Tax Offences with GST

GST Offences and Penalties
GST-registered persons are responsible for complying with the various Inland Revenue Acts. You may face penalties and interest if you do not meet the obligations set out in those Acts.

Any registered person who does not comply with the tax laws commits an offence and may be convicted.

Penalties may include:

  • a fine of up to $50,000 and/or
  • a prison term of up to 5 years.

Offences include:

  • not registering when you are required to
  • failing to file returns, keep records, or supply information and invoices
  • failing to issue a tax invoice within 28 days of being requested to do so
  • supplying false information on your returns, invoices, records and anywhere else in connection with your tax affairs
  • obstructing any Inland Revenue officer
  • failing to deduct and/or account for money owed by a registered person when you are required to do so
  • using money collected to pay GST for other purposes
  • conspiring with others to commit offences against the Goods and Services Tax Act 1985.

Late Payment Penalties

If tax is not paid by the due date, a late payment penalty will be charged. For every month the amount remains unpaid, a further incremental penalty will also apply.

An initial 1% late payment penalty will be charged on the day after the due date and a further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date. A further 1% penalty will be added each following month on the amount still owing.

Shortfall Penalties
Shortfall penalties are charged on top of any tax, late payment penalties and interest that may already be payable. The penalty is charged on the amount of any understatement of tax or tax shortfall.

There are 5 categories of fault, each carrying a standard penalty (as a percentage of the tax shortfall):

  1. lack of reasonable care 20%
  2. unacceptable tax position 20%
  3. gross carelessness 40%
  4. abusive tax position 100%
  5. evasion 150%

In some circumstances penalties can be reduced by 50%. In addition to these penalties, there could be fines charged and/or imprisonment of up to 5 years.