Definition
A deficit penalty is imposed when the total tax paid during the year (advances + withholding) is less than 90% of the final tax liability. The penalty rate is approximately 4% per month on the deficit amount. This is a significant penalty that can quickly accumulate.
Avoidance
To avoid the deficit penalty: review your advance payment rate mid-year, request an increase if your income is rising, make voluntary payments before year-end, and ensure all withholding tax is properly credited.
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.