Provisional tax is a type of tax owed to the IRD each year a business has made a profit, usually in three or four lump sums. Instead of paying in lump-sums at the dates IRD says, payments can be made in several smaller instalments throughout the year. This can be done through Tax Management NZ where we help to make tax payment’s for businesses far more manageable.
Everybody should know their provisional tax dates. If you need help, please contact your accountant so they can assist you.
Provisional tax dates in NZ can differ and derive from two factors:
• The first factor is your balance date. This is when your relevant tax year ends. For most New Zealand businesses, this is the last day of the tax year: March 31st. This is known as a March balance date.
• The second factor is the accounting method you use to calculate your provisional tax obligations. This can be one of several methods, including the accounting income method and the standard uplift, estimation or GST ratio options.
You may use another method outside of Standard Uplift. Those include Accounting Income, Ratio or Estimation. If that is you, please click here to see all related provisional tax dates.
As stated earlier, provisional tax is due in three or four predetermined instalments during the financial year. These depend on the two factors mentioned above. There are generally three provisional tax payments and a terminal tax date. The terminal tax date depends on whether you use a tax agent to file your returns, instead of doing it yourself. If you file your own returns (i.e. do not use an agent), your terminal tax date is February 7th. If you use an agent, your provisional tax due date will be extended to April 7th.
The following provisional tax dates assume a March balance date. These dates will be different for every business that does not have a March balance date. If your financial year ends outside of March, the relevant month of each provisional tax payment will differ. They also assume a standard or estimation method of provisional tax calculation.
If your method of provisional tax calculation differs, the number of your provisional tax payments may vary.
- First provisional tax payment
In most cases, your first provisional tax due date will be August 28th. This will be the first payment after your financial year ends on March 31st.
- Second provisional tax payment
Your second provisional tax due date will be on January 15th.
- Third provisional tax payment
Finally, your third provisional tax due date will be May 7th.
It’s a good idea to note relevant provisional tax due dates in your calendar. For the sake of simplicity, the dates above have been calculated to align with the largest group of New Zealand businesses. For further questions about provisional tax payment dates, or how tax pooling could help your business, please get in touch with the friendly team at Tax Management New Zealand.