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On this page:
- When penalties apply
- Penalties and late emissions returns
- Penalties and inaccurate emissions returns
- Culpability and when a penalty applies
- How we calculate penalties for late emissions returns
- How we calculate penalties for incorrect emissions returns
- Penalties for failing to pay units on time
- Penalties accrued before 1 January 2021
When ETS penalties apply
If your post-1989 forest land is registered in the ETS, or if you deforest pre-1990 forest land, you may face a penalty if you fail to:
- submit emissions returns on time when they are due
- make sure the information in your emissions returns is accurate
- pay New Zealand Units (NZUs or 'units') to the government when they are owed and by the due date.
New penalties for clear-felling or deforesting land in permanent forestry
From 1 January 2023, new penalties apply for post-1989 forest land in permanent forestry if you:
- clear-fell the land so that 30% or less crown cover remains per hectare, or
- deforest any part of the land.
Read more about fines for clear-felling or deforesting land in permanent forestry
Penalties and late emissions returns
Submit your emissions return on time when a mandatory one is due. If it is on time and accurate, you will avoid a penalty.
If you are late in filing your mandatory emissions return, we will tell you. We will give you a further 20 working days to submit it. If you submit your return within this time, no penalty will apply if it is correct.
If you don't meet the extended deadline, you may incur a penalty. The size of the penalty depends on what happened and the reasons for the late return. We explain more about penalties and how they are calculated later on this web page.
If the emissions return was late but reports no emissions or removals (zero change in units over time), no penalty will apply.
More about emissions returns and when and how to file them
Penalties and inaccurate emissions returns
Make sure your emissions return is accurate when you submit it. If it is accurate (and sent to us on time, for mandatory returns) you will avoid receiving a penalty.
If we find errors in any emissions return, we will let you know if we are going to correct it. While the return is being reviewed, any other pending deadlines may be paused:
- deadlines for units owing from the return
- deadlines for any outstanding penalties.
If we correct the return, we will assess if any penalties apply.
The size of the penalty depends on what happened and the reasons for the late return. We explain more about this later on this web page.
If the emissions return reports no emissions or removals (zero change in units over time), no penalty will apply.
Culpability and when a penalty applies
We make decisions about penalties for late or inaccurate emissions returns. When we do this, we take your circumstances into account. This includes finding out what happened and the reasons for the late return or error. We will contact you to ask about this.
Understanding your circumstances will help us decide whether you took 'reasonable care' when submitting your return. 'Reasonable care' means what a reasonable person in the same circumstances would have done.
If we find that you have not taken reasonable care, you will usually incur a penalty.
We will then determine your 'culpability'. Culpability means how your actions contributed to what happened and the reasons for the lateness or error.
To work out your level of culpability, we use a sliding scale. This scale ranges from 'did not take reasonable care' to 'carelessness' to 'knowingly failed'. Our assessment of your level of culpability will affect the size of the penalty.
Let us know if you:
- realise you have missed a deadline, or
- find you made a mistake after you submit your emissions return.
If you tell us about this voluntarily, we will take this into account.
Our policy has more information on how we assess whether reasonable care was taken.
Emissions Trading Scheme operational policy: Assessing penalties for failing to correctly report emissions and removals [PDF, 293 KB]
How we calculate penalties for late emissions returns
If we find that a penalty applies for failing to submit a mandatory emissions return after the extended deadline, it is calculated based on:
- the number of units involved
- our assessment on why it was filed late (level of culpability)
- the current carbon price
- whether you told us voluntarily.
If you received units from the return, the penalty is capped at $1,000.
If the emissions return reports no emissions or removals (zero change in units over time), no penalty will apply.
How we calculate penalties for errors in emissions returns
If we find that a penalty applies for errors in an emissions return, we base this calculation on:
- the size of the error
- our assessment of the reasons behind this error (level of culpability)
- the current carbon price
- whether you told us about the error voluntarily.
If the error means you received too few units or paid too many units, the penalty is capped at $1,000.
If the emissions return reports no emissions or removals (zero change in units over time), no penalty will apply.
Penalty for failing to pay units on time
Sometimes your emissions return will show that you must pay units. For example, if your return shows a drop in carbon as a result of:
- harvesting registered post-1989 forest
- deforestation
- deregistering from the ETS.
If you fail to pay the units you owe, the size of the penalty will depend on the number of units involved.
These penalties are administered by the Environmental Protection Authority (EPA). More information about how they are calculated is in the EPA guidance.
Guidance on penalties under the Climate Change Response Act 2002 – EPA [PDF, 742 KB]
Penalties accrued before 1 January 2021
The way penalties are calculated changed on 1 January 2021. Penalties for something that happened before 2021 will be calculated using the previous method.
