Tax Facts - Provisional Tax
Provisional Tax is not a separate tax but a way of paying your income tax as the income is received through the year. You pay instalments of income tax during the year, based on what you expect your tax bill to be. The amount of provisional tax you pay is then deducted from your tax bill at the end of the year.
If your residual income tax is $5,000 or more you will have to pay provisional tax for the following year. Residual income tax is basically the tax to pay after subtracting any rebates you are eligible for and any tax credits (excluding provisional tax). Residual income tax is clearly labelled in the tax calculation in your tax return.
Due dates
The due date and amount of instalments you need to make for payment of your provisional tax each year depends on your balance date, which of the above options you use and how often you pay GST (if registered).
If you have a 31 March balance date and use the standard or estimation option, provisional tax payments are due on:
First instalment 28 August Second instalment 15 January Third instalment 7 May
This method of paying provisional tax may not suit everyone and we suggest that you discuss this with your accountant before deciding on this option.
For further information on provisional tax give us a call or refer to the IRD Website.
If your residual income tax is $5,000 or more you will have to pay provisional tax for the following year. Residual income tax is basically the tax to pay after subtracting any rebates you are eligible for and any tax credits (excluding provisional tax). Residual income tax is clearly labelled in the tax calculation in your tax return.
Due dates
The due date and amount of instalments you need to make for payment of your provisional tax each year depends on your balance date, which of the above options you use and how often you pay GST (if registered).
If you have a 31 March balance date and use the standard or estimation option, provisional tax payments are due on:
First instalment 28 August Second instalment 15 January Third instalment 7 May
This method of paying provisional tax may not suit everyone and we suggest that you discuss this with your accountant before deciding on this option.
For further information on provisional tax give us a call or refer to the IRD Website.
