| Shortfall interest charge rates |
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On 29 June 2005, the shortfall interest charge (SIC) was introduced for amendments of 2004-05 and later years' income tax assessments. The SIC replaces, at a lower rate, the general interest charge (GIC) applied to income tax shortfalls for the period before assessments are amended.
Generally, the SIC applies from the due date for payment of the earlier, understated assessment until the day before we issue the notice of amended assessment. The amended assessment or tax shortfall and the related SIC are due 24 days after the amended assessment is issued. SIC is calculated on a daily compounding basis. The formula for calculating SIC is provided in section 280-105 of Schedule 1 to the Taxation Administration Act 1953. It uses a base interest rate and an uplift factor of 3%. The base interest rate is defined in tax legislation and is the 90-day Bank Accepted Bill rate published by the Reserve Bank. The SIC rate is updated quarterly with rates for the next quarter generally announced two weeks before the start of that quarter. The rates are in the table below.
What to read/do nextFor more information about the SIC, refer to ROSA in brief - shortfall interest charge.Newer news items:
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