Abstract:
Use of money interest (UOMI) is imposed on both unpaid and overpaid tax by the Tax Administration Act 1994. The UOMI imposed on unpaid tax represents a significant cost for taxpayers. The Govenrment has changed the rules relating to the setting of the UOMI rates several times since they came into effect in 1995. The article analyses the rules (as amended) and considers whether they adequately and fairly meet thier statutory objectives of compensating the Commissioner and taxpayers for the loss of use of money and encouraging taxpayers to pay the corrct amount of tax on time. The writer argues that the current rules do not achieve a fair balance between the statutory objectives and that they operate to the detriment of taxpayers. He suggests ways in which the Government could address the perceived deficiencies in the rules.