Covid-19 remission rules on Use of Money Interest (UOMI) and How it is Taxed?

According to the recent publication from the IRD, the Covid-19 remission rules on Use of Money Interest (UOMI) applied to provisional tax instalments have been reiterated and clarified.

Remission Rules:

The remission applies to interest that arises from the late or short payment due to Covid-19.

It does not apply to the late or short payment due to any other reason.

Who is eligible:

For taxpayers who have RIT of less than $60,000 that satisfy the below criteria:

1. Used the standard method for 2020 provisional tax; and
2. Paid all instalments due before 14 February 2020 on time and in full; and
3. Paid one or more instalments that fell due after 14 February 2020 late; and
4. Incurred UOMI from 8 May 2020 up to 7 April 2020.

For eligible taxpayers, IRD will manually update the remissions. It would take some weeks to commence.

For taxpayers who have RIT of more than $60,000 may be eligible if they were not able to pay sufficient provisional tax because they could not correctly estimate the 2021 RIT due to the impact of Covid-19, or if qualified for relief as set out in SPS 18/04

For eligible taxpayers, apply to IRD directly or contact your tax agent.

Payment allocation rules for UOMI calculation:

Payments will be allocated to older unpaid instalments first.

Please note that the above does not constitute specific tax advice and only intends to be a general advice. If you require specific advice related to your situation, please reach out to our tax consultant using the ‘contact us’ option.

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