Contents

Appendix 3
Other forms of penalty

Administrative penalties

The term “administrative penalty” is used here to refer to (usually) low-quantum, fixed penalties imposed directly by a regulator. In the main there is no discretion around their imposition, though there may be discretion to waive or remit them.708  Most of the Tax Administration Act 1994 penalties would generally be understood to be administrative penalties.709  Other examples are in the Charities (Fees Other Matters) Regulations 2006 (for example, failing to file an annual return results in a $200 penalty)710  and the Financial Reporting Order 1994 (late filing of financial statements can result in a $25 or $100 penalty).711

However, there are exceptions to the generally low quantum of administrative penalties in New Zealand. The “administrative penalty” in the Gambling (Fees) Regulations 2007, while not discretionary as to quantum, can be very large: the penalty for late payment of an annual fee amounts to five per cent of the fee per month. In the first year that the regulations were in force, Sky City Auckland Casino’s annual fee was $3,006,474, so a late payment penalty would have totalled around $150,000 per month.

And, the term “administrative penalty” is used to describe a variety of penalties, some of which occupy an administrative/discretionary middleground. For example, the responsible Minister can impose “civil penalties” under the Fisheries (Demerit Points and Civil Penalties) Regulations 2001712  and the Forests (Permanent Forest Sink) Regulations 2007.713  Under the former, the Minister may record demerit points for certain breaches of the regulations by an “approved service delivery organisation”.714  The demerit points are converted to penalties at the end of each year. The demerit points and their accompanying penalties are fixed in the regulations; however, the Minister has discretion as to whether to impose them; unlike some other administrative penalties, they do not accrue automatically.715  We also note that the Land Transport Management Act 2003 and the Tokelau (Territorial Sea and Exclusive Economic Zone) Act 1977 provide for the creation of civil penalties by regulation. None have been made and it is not clear what the process for their imposition would be – whether these would be administrative penalties similar to those just discussed or whether they would be more in the nature of a non-judicial discretionary penalty.716

Finally, the Fisheries Act 1996 contains what is referred to as an “administrative penalty”, but which differs from those described above. The penalty can be imposed in place of instigating criminal proceedings where the penalty for the offence is up to $250,000. The Chief Executive may, having regard to all the circumstances including whether the offence was a minor one, and the person’s previous conduct, offer an administrative penalty in place of prosecution. The person can opt to be subject to normal criminal proceedings, or can admit the offence and make submissions as to the level of administrative penalty. They are deemed to have admitted the offence if they do not respond within 28 days. The maximum penalty is one–third of the maximum criminal fine that would otherwise be available, and the Chief Executive cannot commence criminal proceedings if the offence is admitted.

The penalty is enforced as a criminal fine. So, while the term “administrative penalty” is used, this is more akin to an infringement offence but with a much higher fine (see discussion of infringement offences below).

708See for example the Tax Commissioner’s discretion to remit tax penalties for reasonable cause: Tax Administration Act 1994, s 183A.
709Penalties in the Tax Administration Act 1994 include late filing penalties (maximum $500); non-electronic filing penalties (the greater of $250 or $1 per employee); late payment penalties (five per cent of unpaid tax, added the day after the penalty falls due, with another one per cent penalty added each month); shortfall penalties (the amount payable is specified as a percentage of the tax shortfall and depends on which of the penalty provisions liability arises under); imputation penalty taxes (10 per cent of the amount of further income tax that gave rise to the liability for the tax); and dividend withholding payment penalty taxes (10 per cent of the amount of the additional payment that gave rise to the liability for the penalty tax).
710Charities (Fees and Other Matters) Regulations 2006, r 9(2).
711Financial Reporting Order 1994, r 5. The Registrar has discretion to remit the penalty if it is just and equitable to do so: r 5(3A). A similar fine and waiver provision is in the Retirement Villages (Fees) Regulations 2006.
712The regulations are made pursuant to the Fisheries Act 1996.
713The regulations are made pursuant to the Forests Act 1949. Here the level of the penalty (for harvesting within a forest sink area during the restricted period unless the harvesting is consistent with approved harvesting practice: reg 7) is determined as a function of the number of forest sinks harvested: reg 9.
714At present there is only one ASDO, the SeaFood Industry Council, or SeaFIC, which has delegated its role in this area to its subsidiary, Commercial Fisheries Services Ltd, also referred to as “FishServe”: <www.seafoodnewzealand.org.nz>.
715Fisheries Act 1996, s 296S(1). The Minister must give written notice of his or her intention to impose demerit points and if there is an objection the issue is determined by the District Court on the balance of probabilities: s 296V.
716These penalties are included in the table in appendix 1.