Safe Harbour- meaning and definition
What is safe harbour?
The safe harbour provision is the threshold at which IRD use of money interest applies if income tax for the year is underpaid. The threshold is residual income tax of less than $60,000. If a taxpayer meets the safe harbour criteria, IRD will only charge interest from their terminal tax date if they haven’t paid any amount still owing by then. Taxpayers who pay their provisional tax using the standard uplift method and make all required payments on time and in full can take advantage of this provision. It can also be used by taxpayers in their first year of business when their residual income tax is less than $60,000.
Safe harbour- video guide
Tania Ohlson, our Client Care Specialist, explains safe harbour for provisional tax payers.