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Inland Revenue

Tax Policy

PUBLISHED 2 May 2001

Rules on transfers of overpaid tax to be clarified

The Government today announced its intention to introduce legislation to remove uncertainty about whether Inland Revenue can transfer overpaid tax to a period in which a taxpayer has no liability, and hence whether interest is to be paid on the excess for that period. The amendment will authorise these transfers, and will do so retrospectively under certain conditions. For the announcement see media statement. For details of the proposed amendment see our special report, Transfers of overpaid tax to a period of nil liability (DOC 44KB, PDF 18KB).

Hon Dr Michael Cullen
Minister of Revenue


Overpaid tax transfers - law change coming

The Government will introduce legislation to remove uncertainty about overpaid tax that is transferred from one year to the next, Revenue Minister Michael Cullen announced today.

"This issue has caused concern and uncertainty in the business world for some time. If a business overpays its tax, it may ask Inland Revenue to carry forward the excess tax to another year, in the expectation that the department will pay use-of-money interest on the excess.

"But the law is not clear on whether IRD can transfer the excess tax if the business has no outstanding tax liability in the future year, and therefore whether interest should be paid on the excess," Dr Cullen said.

"The law change will make it clear that Inland Revenue can transfer tax payments in this instance, provided the taxpayer concerned meets certain criteria. The change, which will be introduced into Parliament as soon as possible, will apply retrospectively.

"This is a pragmatic solution to a difficult issue, and I wish to thank the Institute of Chartered Accountants of New Zealand for its contribution to the solution," Dr Cullen said.

For details on the legislative change see the special report, "Transfers of Overpaid Tax to a Period of Nil Liability", on the website of the Policy Advice Division of the Inland Revenue at

Contact: Michelle Davie [Policy Advisor - Revenue] 04 471 9728