11Late payment penalty

11 Late payment penalty

(1) If: (a) an equivalent amount is payable by a collection agent under rules made for the purposes of subsection 10(1); and (b) the whole or a part (the unpaid amount) of that equivalent amount remains unpaid at the end of the day (the due day) on which the equivalent amount is due to be paid; the collection agent is liable to pay to the Commonwealth, by way of penalty, an amount, worked out under subsection (3), for each day in the period under subsection (2).

Note: The penalty stops accruing once the collection agent pays the unpaid amount.

Penalty period (2) The period begins on the day after the due day and ends at the end of the day before the day on which the whole of the unpaid amount, or the outstanding balance of the unpaid amount, is paid. Amount of penalty (3) The amount of penalty for a day (the penalty day) in the period described in subsection (2) is worked out using this method statement.

Method statement

Step 1. Divide 0.02 by the number of days in the calendar month in which the penalty day occurs.

Step 2. Multiply the amount at step 1 by the sum of:

(a) so much of the unpaid amount as remains unpaid at the end of the penalty day; and

(b) the total amount of penalty (if any) for days in each calendar month before the calendar month in which the penalty day occurs.

Step 3. Round the amount at step 2 to the nearest cent (rounding 0.5 cents upwards): the result is the amount of penalty for the penalty day.

Note: The amount of penalty for a day is based on a rate of 2% per month.

Note: Example: Assume an equivalent amount of $1,500 is due on 31 August and a partial payment of $600 is made on 16 September and the outstanding balance of $900 is paid on 10 October.

Note: The period under subsection (2) is the period beginning on 1 September and ending at the end of 9 October.

Note: Calculation of penalty in September based on unpaid amount of $1,500

Note: The penalty for each of the penalty days 1‑15 September is $1 (which is 0.02 divided by 30 and the result multiplied by $1,500).

Note: The total penalty for the penalty days 1‑15 September is $15.

Note: Calculation of penalty in September based on outstanding unpaid amount of $900

Note: The penalty for each of the penalty days 16‑30 September is 60 cents (which is 0.02 divided by 30 and the result multiplied by $900).