Authority for the Commissioner of Inland Revenue to impose fees for credit card payments

Section 226C of the Tax Administration Act 1994

Section 226C of the Tax Administration Act is a new section which allows the Commissioner of Inland Revenue to offer a credit card facility for payment of all tax and social liabilities subject to an appropriate credit card transaction fee if taxpayers choose to use this facility.

Background

Since 2004, the Commissioner has accepted credit card payments from student loan borrowers and child support liable parents who are based overseas. Section 226C extends this facility to all payments of tax and social policy liabilities and gives the Commissioner authority to charge taxpayers a credit card transaction fee. The overall benefit of extending this facility is that it will provide taxpayers with another payment option to meet their liabilities.

Key features

Section 226C of the Tax Administration Act 1994 allows the Commissioner to charge taxpayers a fee, if they choose to use a credit card. The current fee is set at 1.42 percent of the total transaction and this fee may change by Order in Council.

The fee is not applicable to overseas-based student loan borrowers and overseas-based child support liable parents who choose to make their payments by credit card.

Overseas child support parents and student loan borrowers

The fee is passed on to domestic-based student loan borrowers and child support parents by Inland Revenue. These individuals also have other practical ways in which they are able to comply with their repayment obligations, such as internet banking. Overseas liable parents and borrowers have fewer repayment options than people based in New Zealand. Absorbing the fee helps reduce their compliance costs. Inland Revenue will, therefore, continue to absorb the fee for credit card payments made by overseas liable parents and overseas student loan borrowers.

Application date

The application date will be from the date of Royal assent, 29 August 2011.