Five top tips for paying 28 August provisional tax
Are you due to pay 28 August provisional tax?
For most business taxpayers, your first instalment of provisional tax for the 2025 tax year is coming up. It’s important to pay what you owe on the due date. Inland Revenue won’t hesitate to charge steep interest and late payment penalties if you don’t.
If you’re a business owner or operator, here are five useful tips to ensure you’re ready to pay the first provisional tax payment for the year on the 28 August due date. For agents, you may also wish to share these tips with your clients to help them prepare.
1. Assess your cashflow
Now’s the time to look at the money coming in and going out of your business.
Cast your eyes over your accounts receivable report to see which customers owe you money. If required, ask them if they can sort their bill earlier. Conversely, see if you can buy more time if you owe suppliers money.
If cashflow is tight or you have a better use for the money, keep reading. There’s an option that lets you pay 28 August provisional tax when it suits you.
2. Be aware of the fish hooks
If you pay less than $60,000, you are what’s known as a safe harbour taxpayer. You won’t be charged interest by Inland Revenue if you pay your provisional tax late. But, you will be charged late payment penalties. You can find out more about safe harbour rules here.
3. Know your methods to calculate 28 August provisional tax
It’s important you are aware of the different methods available to calculate your provisional tax payments. For more information about the provisional tax methods available to you, see our Provisional Tax Guide.
4. Consider using tax pooling
An Inland Revenue-approved tax pooling intermediary such as TMNZ can assist if cashflow is tight. Working with us allows you to pay 28 August provisional tax at a time and in a manner that suits you, without incurring Inland Revenue interest or late payment penalties. You can defer the full payment to a date in the future or pay off what’s due in instalments.
TMNZ will date-stamp tax for you in a special trust account with Inland Revenue on your behalf. You pay TMNZ at the agreed future date or as and when it suits your cashflow, and the tax will be transferred to your account with Inland Revenue, and treated by them as being paid on time.
5. If in doubt, consult a professional
Do you have any questions about 28 August provisional tax? Seek the advice of an accountant or tax advisor. They can determine the best provisional tax calculation for your business and help you manage your payments and cashflow.
If you wish to learn more about the provisional tax payment flexibility TMNZ offers businesses, get in touch.
Get provisional tax peace of mind with TMNZ
The 28 August provisional tax payment date doesn’t need to cause stress. TMNZ offers flexible, IR-approved payment solutions that give you more control over your cashflow—without the risk of late payment penalties or use-of-money interest. Explore our full 28 August payment guide or talk to TMNZ today to find out how we can support your business this tax year.
Information in this article is correct as at 31/7/25. You should consult with your tax advisor concerning all tax matters. Read our Terms and Conditions.
First year of trading and provisional tax
What are a taxpayer’s provisional tax obligations in their first year of trading?
This is a question we receive a lot. In fact, there is certainly a lot of confusion out there.
As most know, their first year of trading is not tax-free. However, when income tax is due and payable depends on a taxpayer’s tax liability (called their residual income tax (RIT)) for the year and if they are a ‘new provisional taxpayer’.
So, with that in mind, we explain below how the provisional tax rules work for new business taxpayers.
First year of trading: RIT is less than $60,000
If a taxpayer’s residual income tax (RIT) is less than $60,000 in their first year of trading, they won’t need to pay provisional tax that year. Instead, tax is payable as a lump sum on their terminal tax date, which for most taxpayers will be 7 February or 7 April of the year after this tax year.
Use of money interest and late payment penalties will be incurred if their tax bill isn’t paid by the due date.
If the RIT is more than $5000 in their first year of trading, they will be a provisional taxpayer for the following year.
First year of trading: RIT is $60,000 or more
Inland Revenue (IR) will charge interest if taxpayers fall into the ‘new provisional taxpayer’ category and you don’t make provisional tax payments.
The new provisional taxpayer criteria are different for individuals and companies/trusts.
An individual qualifies as a new provisional taxpayer if:
- Their RIT for that tax year is $60,000 or more
- Their RIT in each of the four previous tax years was $5000 or less
- They stopped receiving income from employment and started to receive income from a taxable activity during that tax year.
A company or trust qualifies as a new provisional taxpayer if:
- Their RIT for that tax year is $60,000 or more
- They did not receive taxable income from a taxable activity in any of the four previous years
- They started receiving income from a taxable activity during that tax year.
Please take note of the different criteria for individuals and companies/trusts. This catches taxpayers out.
When is the first provisional tax payment due?
Inland Revenue will charge interest (see the current rate here) on the number of provisional tax payments a taxpayer could have made in their first year of business if they meet the new provisional taxpayer criteria.
Of course, that number depends on the date on which their business starts trading.
For someone with a 31 March balance date, refer to the table below:
| If the first year of trading starts… | Then the number of provisional tax instalments payable is… | And the due dates are… |
| Before 29 July | Three | 28 Aug, 15 Jan and 7 May |
| 29 July – 15 Dec | Two | 15 Jan and 7 May |
| 16 December+ | One | 7 May |
These dates will differ if your balance date isn’t 31 March or if you file GST returns on a six-monthly basis.
First provisional tax payment – The basic amount
So, what happens if you meet the new provisional taxpayer criteria in your first year of trading?
Well, put simply, Inland Revenue will divide your tax liability (RIT) for the year by the number of instalments you were liable to pay per the table above.
For instance, say your business starts trading on 1 October and your RIT for the year was $69,000.
IR will charge interest from two provisional tax payment dates: 15 January and 7 May. The amount on which interest will accrue at each due date will be $34,500.
Reducing exposure to Inland Revenue interest
Taxpayers may wish to pay provisional tax in their first year of trading to mitigate their exposure to IR interest if they expect their RIT to be $60,000 or more.
If they are an individual or a partner in a partnership and meet certain criteria, they may also get an early payment discount of 6.3%. This is provided they make voluntary payments before their tax date and haven’t been obligated to pay provisional tax in the current or previous four years.
Reduce IRD Interest with TMNZ
Worried about use of money interest on your first year tax bill?
If you have missed making a provisional tax payment, or wish to delay when you make the provisional tax payment, TMNZ can help. TMNZ can delay the payment of your provisional tax, or help you with any missed payments. The interest cost to you is well below Inland Revenue’s interest rate. Talk with TMNZ to stay on top of your tax obligations without the stress.
This article has been written in general terms only. You should not rely upon this to provide specific information without also obtaining appropriate professional advice after detailed examination of your situation.
Growing a career and team in Christchurch: Penny Ineson’s leadership story
When Penny Ineson joined TMNZ 10 years ago, she had an ambitious 90-day plan that included starting a Christchurch office. A decade later, that plan has come to life. With a recent promotion to Head of Advisor Relationships – South Island, Penny now leads a team of four, aiming to ‘take the South Island by storm’ in tax payment solutions.
How are you feeling about your new leadership role?
I am so excited! It’s a little nerve-wracking because, while the investment is in the South Island, it’s also an investment in me. But I always feel valued and supported by TMNZ to work hard and do my job well. Throughout my promotions (Business Development Manager, Senior Client Relationship Manager, and Regional Manager), I’ve received ongoing support, great communication and connection with the wider team , and flexible working hours, which have allowed me to manage maternity leave, complete my Bachelor of Commerce in Accounting, and most recently, secure office space in Christchurch.
What’s the best thing about your job?
I love interacting with people; my clients are down-to-earth and genuine. I enjoy helping businesses with tax; it’s rewarding to hear how TMNZ supports them to grow or navigate tough times.
What does it mean to you to be a female leader in accounting?
It’s really special. I love networking with other female leaders in the industry. At TMNZ we have held a number of events where we acknowledge female leaders within the accounting and tax industries. I’ve witnessed more and more women rise in the industry, and now that’s me too, so I’m proud.
What does your promotion signal about TMNZ’s growth and success in the South Island?
From 2015 to 2021, I was the primary person managing accounts in the South Island. In 2022, I gained the support of Isabella Prichard (Customer Growth Manager,Auckland) to reach more clients. We work exceptionally well together and wouldn’t be where we are now without her ambition, enthusiasm, and drive.
While we have done well to spread the word about TMNZ’s provisional tax solutions across the South Island, there are still many people and businesses that don’t know how we can help them. Now, we have Harry Macgregor (Customer Success Manager,) and Lexie Weaver (Customer Success Consultant) on board in Christchurch.
TMNZ’s investment shows the faith they have in us and our ability to take the South Island by storm.
What did you take into account when hiring new team members?
It’s so important for our team to be able to relate to and care about people regardless of whether they’re paying $500 or $5,000,000. Tax can be a stressful topic for people, so we need staff who are compassionate as well as qualified.
Lexie, a science graduate from Victoria University, has empathy in spades and great problem-solving skills, and Harry, a Chartered Accountant, can walk into a room and start a conversation with anyone. It’s exciting to have a combination of knowledge and strong interpersonal skills.
How are you going to be supporting South Island businesses?
I have lots of ideas, but first and foremost, we’re going to be visiting the regions, listening to people’s pain points, and figuring out how we can help solve them.
We’ll be planning more events so we can get to know our clients in a more informal setting.
How do you maintain a good work/life balance?
My non-negotiable is a group fitness gym session in the morning. It’s the only time of day when my mind’s not racing; for 45 minutes, I’m just trying to survive the workout! I have amazing support from family and friends to help me maintain self-care amongst the chaos.
Please describe in three words how you’re feeling about the next 90 days.
Primed. Optimistic. Excited.
How can people get in touch?
I’d love to chat to anyone interested in learning how TMNZ can support their business (or their clients businesses) through our smart tax payment solutions. Please contact us here, and ask to speak with Penny.
From left: Penny Ineson—Head of Advisor Relationships South Island, Harry Macgregor—Customer Success Manager, Lexie Weaver—Customer Success Consultant
Enhancing financial flexibility for a healthcare services provider
The situation
The Finance Manager at a Healthcare Services business in Auckland, began working with TMNZ five years ago when the business experienced unexpected fluctuations in their retail operations. The business was looking for ways to maintain good cashflow while supporting the international group’s financial position.
The challenge
During the 2024-25 fiscal year, the Finance Manager was juggling many financial priorities, such as:
- meeting quarter-end, half-year, and year-end cashflow targets without incurring external debt
- maintaining tax compliance while optimising the balance sheet.
The solution
They chose to leverage TMNZ’s Tax Drawdown solution because:
- TMNZ provided more efficient and easier access to funds compared to other finance channels
- the solution helped optimise the balance sheet position, providing access to short term cash rather than long-term bank loans
- significant administrative costs were saved, including legal fees and bank covenant reporting requirements
- they could maintain their tax deposit date after repaying the drawdown.
The results
By using TMNZ’s services, the Healthcare business achieved:
- enhanced support for the international group’s financial position, contributing positively to the group’s risk profile
- the ability to temporarily access funds, which was highly valued by the international group’s treasury team
- improved cashflow management without incurring more costly third-party debt.
Your key takeaway
TMNZ’s solutions provide flexible and efficient tax management, aligning with business needs and supporting financial stability without the constraints of traditional finance channels.
For more on how our Tax Drawdown solutions can help your business, go here.
TMNZ: The ultimate cashflow flexibility tool for your business
In tough economic times, it can be hard for businesses to stay on top of cashflow and juggle their tax liabilities. For companies and sole traders dealing with fluctuating cashflow and provisional tax headaches, there’s an easier way to manage your obligations—tax pooling.
Did you know TMNZ’s tax pool can help you manage your tax by matching your cashflow forecasts with your provisional tax payments? And you can use tax pool deposits as an alternative funding source when cashflow is tight.
How we can help
TMNZ is an Inland Revenue (IR)-approved tax pooling provider, meaning you can use us to pay income tax on your behalf at a time that suits you. We offer greater flexibility over how and when you pay provisional tax.
First, you’ll need to think about your cashflow forecast. If you’re unsure how to put one together, read our cashflow management guide.
Once you’ve got your cashflow projection, we can work together to figure out the best time to pay your provisional tax. From there, all you need to do is tell us your tax amount owed, the date it is due, and how you would like to pay.
When your tax bill arrives, we’ll transfer the amount required to IR on your behalf as a time-stamped payment. IR will treat your tax as if it was paid on time, eliminating the risk of being charged interest or late payment fees. Simple.
A working capital solution
TMNZ’s payments to IR mean you can keep money in your business and use it at the times of the year you’ll need it most. You can top up your payments later into our tax pool at any time.
Tax pooling is a perfect solution for businesses worried about future cashflow and looming obligations. By partnering up with us, you’ll have total control over your tax bill, rather than working around IR’s strict deadlines.
With no more late fees and interest charges from IR to think about, you can get on with running your business. There will be no need to scrape together funds in the middle of holidays or quiet periods to meet IR’s deadlines.
TMNZ can also save you money by avoiding penalties and interest charges if you’ve missed or underpaid tax. We charge much lower interest rates than the penalties imposed by IR if you’re overdue.
We’re a line of credit
Another amazing TMNZ feature is that we can be a line of credit for your business.
If you’ve deposited funds into our tax pool but find yourself short on cash, you can withdraw that money whenever you want to use it as working capital.
If you’ve paid provisional tax into our pool, you’ll have access to a working capital facility up to the value of your deposit. This provides even more flexibility for you and your team to get through a cash crunch and stay on top of debt management.
We can offer much cheaper interest rates than bank loans, overdrafts, or unsecured loans, meaning money withdrawn from our pool is better for you and your business, putting you in a stronger position at the end of the year.
Ready to learn more about the benefits of tax pooling?
Download our guide to Better Cashflow Management for top tips on managing cashflow throughout the financial year.
If you’re ready to take control of your tax and gain access to a valuable line of credit for your business, find out more at by reading our Tax Pooling 101 page to learn more about the full range of benefits of being in our pool.
Then talk to your tax adviser about TMNZ tax pooling to take away your tax management worries.
Utilising future tax to create working capital in the real estate industry
Working scenario: Bay Vista Real Estate
The situation
Emma runs a real estate agency in Auckland with 12 agents. The business experiences significant income fluctuations, with summer months (December-March) typically generating 60% of annual revenue.
The challenge
During the 2024-25 tax year, Bay Vista faced:
- peak income during the summer months
- large commission payments to agents in December/ January
- lower winter income but consistent overhead costs
- two of their provisional tax payments due during quieter months
- a preference for flexibility to withdraw funds if new opportunities arose.
The solution
Emma chose a TMNZ solution which allowed her to:
- delay payment of provisional tax due in August until a time when the business was earning revenue
- deposit $180,000 during the peak summer months:
- $100,000 in December
- $80,000 in January
- earn interest on deposited funds
- maintain flexibility to withdraw funds for a new investment opportunity
- ask TMNZ to allocate tax to the correct payment dates once the business’s income tax liability is known.
The results
Emma continued her business growth plans, while she also:
- earned interest on deposits in excess of what her bank was offering
- better matched tax payments to income patterns
- reduced her stress during quieter months
- protected her working capital during winter
- simplified the tax planning process
- created a tax savings discipline for the business
- rested easy knowing no IRD interest or penalties had been incurred.
Going forward, the business can use TMNZ annually as part of growth plans and cashflow strategy.
Your key takeaway
By matching peak periods with future planning, you can earn interest and create a facility to fund business growth when opportunities arise.
For more on how our tax solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Managing uncertainty in tax and costs in the construction industry
Working scenario: Wilson Construction.
The situation
James operates a commercial construction company in Hamilton with 45 employees. The company experiences significant variations in monthly income based on project completion milestones. If clients pay late, this further stresses cashflow.
The challenge
For the 2024-25 tax year, Wilson Construction faced:
- uncertain provisional tax obligations due to uncertainty on when income will be earned
- a large variation between estimated profit ($1.8M) and actual profit ($2.9M) when a project was delivered ahead of schedule in the 2025 financial year, rather than the 2026 financial year as expected
- cashflow regularly tied up in materials and labour costs
- Inland Revenue’s prescribed instalment dates that were not aligned with project payment schedules.
The solution
James opted to manage their tax payments through TMNZ because:
- TMNZ allowed flexible payment dates throughout the year
- the company could make 20+ smaller payments instead of 3 large instalments
- they made payments after receiving project milestone payments
- there was no need to estimate their annual tax liability upfront
- they could change payment amounts at any time based on actual cashflow.
The company made 24 payments ranging from $15,000 to $45,000. They timed payments to follow major project milestone payments and adjusted payment sizes based on project profitability. The total tax paid was $812,000.
The results
James enjoyed better cashflow management, as well as:
- reduced stress around provisional tax deadlines
- no Use of Money Interest charges or late payment penalties
- maintaining a strong working capital position
- better aligned tax payments with business income patterns
- avoiding drawing on construction bonds or expensive bank facilities.
Your key takeaway
Using TMNZ solutions, and seasonal financial planning, tax obligations can be managed to align with business and project outcomes, not IRD deadlines.
For more on how our tax finance solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Reducing the cost of funds for a dairy farm
Working scenario: Henderson Dairy Farm.
The situation
The Henderson family operates a 650-cow dairy farm in Southland. They recently invested in a new milking shed automation system and expanded their herd, creating irregular cash flow patterns during the upgrade period.
The challenge
In the 2024-25 season, they faced:
- $280,000 investment in automation equipment
- an additional $150,000 for herd expansion
- a provisional tax payment of $165,000 due March 2025
- expected lower income for the next few months, picking up in October
- bank facilities already used for farm improvements
- needing to maintain working capital for winter feed.
The solution
The Henderson’s worked with TMNZ to:
- finance the full $165,000 provisional tax payment
- secure 5.6% interest rate (vs IRD’s 10.88%)
- structure repayment to align with improved monthly income
- use TMNZ’s tax finance solution as an alternative funding source.
The results
The Henderson’s saved approximately $4,950 in interest compared to IRD and bank overdraft rates. They also:
- preserved their working capital for winter feed purchases
- maintained a good standing with existing bank
- protected their new automation investment
- avoided selling stock at suboptimal time
- better aligned provisional tax payments with their income cycle.
Your key takeaway
By creating a long-term plan to address variabilities in cashflow, you can plan ahead and secure lower interest on funds to cover costs.
For more on how our tax solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Three ways TMNZ’s tax finance solution has supported NZ business success
Since 2003, TMNZ has helped over 25,000 Kiwi businesses to improve cashflow, through our provisional tax solutions. And in the current market conditions, it’s no surprise that we’re experiencing increased demand from businesses looking to finance their 15 January tax payments. Here we cover three different ways, three different businesses have benefited from financing their tax payments through us.
To find out how tax finance can solve your cashflow challenges this summer, learn more here.
Smarter savings in the hospitality industry
The situation
A local hospitality equipment supplier found themselves in an exciting position. As an importer of specialized restaurant equipment, they noticed a significant shift in currency exchange rates that made their European supplier's products much more affordable than usual.
The challenge
While the timing presented a perfect opportunity to acquire high-quality equipment at reduced prices, the business faced a common dilemma. Their provisional tax payment was due soon, and the funds they had set aside for it were exactly what they needed to secure this advantageous deal. It was a situation many business owners face - having to choose between meeting tax obligations and capitalizing on business opportunities.
The solution
Rather than missing out on the opportunity, the business discovered a practical solution through TMNZ. Their approach was straightforward, they partnered with TMNZ to arrange a deferred payment plan for their provisional tax. They utilised their tax payment funds to purchase the discounted equipment and maintained compliance with Inland Revenue while pursuing business growth.
The Results
The strategy proved successful on multiple fronts, they:
- acquired high-quality equipment at below-market prices
- maintained healthy cashflow despite the significant purchase
- increased their profit margins on future equipment sales
- kept their tax obligations in order without penalties
- and enhanced their competitive position in the market.
Your key takeaway
While many small business owners view tax payments as inflexible deadlines, this case demonstrates how working with TMNZ can help manage tax obligations while seizing time-sensitive business opportunities that enhance profitability.
Scaling up in the transport industry
The situation
A transport business landed a fantastic opportunity - a contract supporting a major infrastructure project that could take their company to the next level.
The challenge
The timing created a cashflow squeeze. While winning the infrastructure contract was a milestone achievement, the business needed to expand their trucking fleet immediately to fulfill the contract requirements. Like many small businesses experiencing growth, they had funds set aside for their provisional tax payment but needed that same cash to fund their expansion.
The solution
The business owner took a strategic approach to managing this opportunity and partnered with TMNZ to defer their tax payment for 12 months. They used their provisional tax funds to purchase an additional truck and started servicing the new contract immediately with their expanded fleet.
The results
This decision generated multiple benefits, where the business:
- secured and began working on the valuable infrastructure contract
- increased their fleet capacity and revenue potential
- generated immediate positive cashflow from the new truck
- maintained good standing with Inland Revenue
- spread their tax payment over a more manageable timeframe.
Your key takeaway
Small business growth often requires making quick decisions when opportunities arise. This case shows how flexible tax payment arrangements can help business owners invest in growth while managing their tax obligations responsibly.
Supporting cashflow over summer in the electronics industry
The situation
A small electronics distribution company faced a common seasonal business challenge. Like many businesses in their industry, they traditionally closed their operations during the Christmas period through mid-January, aligning with their major clients' shutdown periods.
The challenge
The holiday season created multiple financial pressures, like zero revenue during the extended Christmas closure. Staff holiday pay obligations were due during this period, and income tax and GST payments were due on 15 January. The business owner was worried about not being able to fully enjoy their family holiday due to financial stress.
The solution
The business owner took proactive steps to manage their seasonal cashflow, and Connected with TMNZ in December. The owner recognized the recurring nature of their holiday season squeeze, and decided that from now on, they would arrange to defer their 15 January income tax payment until April. This maintained their GST compliance while managing cashflow in a smarter way.
The results
This strategic approach delivered both financial and personal benefits, where the owner:
- balanced their holiday season expenses without depleting cash reserves
- maintained staff satisfaction with timely holiday pay
- shifted tax payments to align with their stronger cashflow period
- enjoyed stress-free family time at the beach
- started the new year in a stronger financial position.
Your key takeaway
Many seasonal businesses face predictable cashflow challenges during holiday periods. This case demonstrates how planning ahead and using flexible tax payment arrangements can help business owners manage their obligations while maintaining work-life balance during crucial family times.
For more on how our tax finance solutions can help your business, go here.
How to manage cashflow over Christmas
Everyone loves the middle of summer and spending time with family and friends over Christmas, but it can be a challenging time of year for many small and medium-sized Kiwi businesses.
According to a poll conducted by the Employers and Manufacturers’ Association, more than half of businesses experience cashflow constraints between January and March.
It’s hardly surprising. The period after Christmas is traditionally slow for many companies, with people away enjoying their holidays. Consumers also tend to reduce spending after the expensive Christmas and New Year period.
Businesses can come under pressure for a number of reasons. Earnings will be down if companies shut over the break, while others will feel the pinch if they have paid bonuses before the end of the year.
Considering these facts, it’s understandable that many businesses struggle to manage cashflow and make provisional tax payments on 15 January every year.
Unfortunately, Inland Revenue (IR) doesn’t factor in these seasonal challenges. IR charges taxpayers 5.04% late payment penalties and 10.91% use of money interest (UOMI) if tax is not received on the due date (as at November 2024).
Your options for managing cashflow
What are the best options for businesses that want to manage cashflow and free-up money over the summer?
Tax pooling is IR-approved and can be used to defer provisional tax payments to a time that suits the taxpayer without incurring late payment penalties and UOMI.
This method is cheaper than using many traditional forms of finance. And tax pooling doesn’t affect existing lines of credit. Also, no credit checks or security are required.
The full amount of finance doesn’t need to be paid back if less tax is owed than first thought. The finance arrangement can be easily extended as well.
How tax pooling can help
Say you want to defer a $5,000 provisional tax payment for six months. You would pay TMNZ a one-off, tax-deductible interest amount and TMNZ would arrange the $5,000 provisional tax payment on your behalf.
The interest amount is based on the amount of tax financed and the period of maturity, so in this instance, it would be roughly $205.
The provisional tax payment is held in an IR account administered by the Guardian Trust. Guardian Trust instructs the IR to transfer the tax into your IR account when you repay the $5,000 principal in six months’ time.
The IR treats the $5,000 provisional tax as being paid on time once the transfer is processed. It’s that simple.
Ready to ease your seasonal cashflow worries? Learn more about our tax finance options today.
Find our latest resources on tax pooling and calculating tax using the Standard Uplift method here.