Penalties

Question 1

The purpose of the penalties regime is to:
- Encourage ___________ compliance and cooperation with IRD.
- Ensure penalties are imposed impartially and ___________, and in keeping
with the seriousness of the breach.
- Sanction non-compliance effectively and at an ___________ level.

Answer 1

voluntary, consistently, appropriate.

Question 2

No fault civil penalties:

Answer 2

voluntary, understandably, appropriate.

Question 3

Which of the following statements is true?
A. Late payment penalties are not charged on amounts under $300.
B. The initial late payment penalty is 5% of the amount of the tax outstanding after
the due date for payment and is imposed in two stages (1% immediately, 4% after
7 days).
C. Late payment penalties can never be remitted.
D. Taxpayers get two grace periods every year for late payment.
E. Late payment penalties are one of the standard based civil shortfall penalties.

Answer 3

The initial late payment penalty is 5% of the amount of the tax outstanding after
the due date for payment and is imposed in two stages (1% immediately, 4% after
7 days)

Question 4

Which of the following statements about late filing penalties is/are true?
A. The late filing penalty for an annual income tax return (IR3 and IR4) is dependent
on the taxpayer’s net income.
B. The late filing penalty for an invoice basis GST return is $250.
C. Taxpayers do get one warning per 12 months for a late filed IR348 (employer
income information) and if the return is filed immediately they are not charged
the penalty of $250.
D. Late filing penalties can be remitted in certain circumstances (e.g. bereavement).
E. All of the above.

Answer 4

All of the above.

Question 5

The basic standard that taxpayers are expected to meet in complying with their tax obligations is that of:

Answer 5

reasonablecare.

Question 6

Which of the following statements is false?
A. Civil shortfall penalties are a percentage of the tax shortfall (understatement of
tax), which result from certain actions.
B. The civil shortfall penalty for evasion is 150%.
C. The civil shortfall penalty for gross carelessness is 40%.
D. The civil shortfall penalty for an unacceptable tax position is larger than the
penalty for an abusive tax position.
E. The largest civil shortfall penalty applies to evasion.

Answer 6

The civil shortfall penalty for an unacceptable tax position is larger than the
penalty for an abusive tax position.

Question 7

Which of the following statements about evasion are true?
i. It involves knowingly or willingly breaching a tax obligation
ii. It is the same as an abusive tax position.
iii. It is a deliberate attempt by the taxpayer to cheat the IRD in an illegal
manner.

Answer 7

It involves knowingly or willingly breaching a tax obligation.
It is a deliberate attempt by the taxpayer to cheat the IRD in an illegal
manner.

Question 8

The standard of reasonable care:

Answer 8

takes into account the age, health, education, business background etc. of the
taxpayer.

Question 9

An
unacceptable tax position is an income tax position taken by the taxpayer that:
- Involves an ____________ or application of the tax law; and
- Fails to meet the standard of being, viewed ______________, about as likely
as not to be the correct tax position

Answer 9

interpretation,objectively.

Question 10

Civil shortfall penalties can be reduced:

Answer 10

A. when there has been voluntary disclosure by the taxpayer.
B. when there has been previous good behaviour by the taxpayer e.g. not liable for
the penalty previously.
C. when there is a temporary shortfall of tax.

Question 11

The standard of proof for civil shortfall penalties is:

Answer 11

the balance of probabilities

Question 12

The onus of proof for criminal penalties:

Answer 12

rests with the Commissioner of Inland Revenue.