Section RC 38 — Income Tax Act 2007: Crediting income tax with early-payment discount

RC 38 Crediting income tax with early-payment discount When this section applies (1) This section applies when a small-business person— (a) pays income tax on or before their balance date for the income year; and (b) during the period from the balance date for the income year to their terminal tax date for the income year, has a credit in their tax account with the Commissioner that is greater than or equal to the lesser of— (i) the total amount paid under paragraph (a): (ii) the amount that would be their terminal tax for the income year in the absence of this section; and (c) files a return of income for the tax year corresponding to the income year; and (d) applies for an early-payment discount on or before the last date for filing a return of income under section 37(5) of the Tax Administration Act 1994. Crediting early-payment discount (2) The Commissioner must credit the tax account of the small-business person with an early-payment discount calculated under subsection (3). Amount of early-payment discount (3) The amount of the early-payment discount is found by multiplying the discount rate under subsection (4) by the lesser of— (a) the total amount paid under subsection (1)(a): (b) 105% of the small-business person’s residual income tax for the income year. Discount rate (4) The discount rate is— (a) 6.7%, if no rate is set under paragraph (b): (b) the rate set by the Governor-General by Order in Council. Defined in this Act: amount , balance date , Commissioner , corresponding income year , early-payment discount , income , income tax , income year , pay , residual income tax , return of income , small-business person , tax account with the Commissioner , tax year , terminal tax , Compare: 2004 No 35 s MBB 2(1)(b), (c), (2)–(4)