H1 Credit for interest on early payments - amount of interest

Show at H1 only the calculated interest amount of 50 cents or more for early payments. Do not show payment amounts

Interest may be payable where an actual payment is made on account of certain amounts more than 14 days before the due date of payment. Amounts that may attract early payment interest include payments of:

• income tax
• shortfall interest charge
• interest payable under section 102AAM of the ITAA 1936.

Amounts that you do not pay directly to us, but which are reduced by the crediting or applying of an amount do not attract early payment interest. These amounts include:

• credit for instalments payable under the PAYG instalment regime
• credit for amounts withheld from withholding payments under the PAYG withholding regime
• an overpayment of other income tax liabilities
• a running balance account (RBA) surplus
• any other credit entitlement arising under a tax law.

Early payment interest is also not payable on:

• any component of the payment that exceeds the amount due
• an amount for any period during which that amount also attracts interest on overpayment.

Early payment interest is calculated from the date the early payment is made to the date the amount becomes due and payable. However, where you pay an amount early on account of a tax liability, and we refund it before the due date of the liability, interest will not accrue for the period after the date on which we refund the amount.

Date of payment is either:

• the date shown on the receipt
• the date payment is mailed to us, plus three working days
• the date shown on the taxpayer's bank statement where payment is made through direct debit, that is, electronic funds transfer (EFT).

Table 7: Interest on early payments

The rates of interest on early payments for the 2011-12 income year are:

Quarter	Interest rate (pa)
Jul - Sep 2011	5.00%
Oct - Dec 2011	4.86%
Jan - Mar 2012	4.62%
Apr - Jun 2012	4.37%

If the early payment extends over two or more quarters, calculate the interest for the number of days in each quarter.

For 2011-12, interest is calculated as follows:

Interest

=

number of days 365 *

x

amount of payment for that quarter

x

interest rate for that quarter

* Use 366 when calculating interest for the following quarters:

• March 2012
• June 2012
• September 2012
• December 2012.

Keep a record of the amount of early payment interest claimed. This interest is assessable income in the income year in which it is paid to the fund or credited against another fund liability.