Jones Business Solutions Ltd | Provisional Tax – options
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Provisional Tax – options

03 Jun Provisional Tax – options

Posted at 08:39h in Tax by

In NZ part of being in business requires you to plan for upcoming tax. In most cases once you start your second year of being profitable you need to be paying tax in advance; known as Provisional Tax.

There are a variety of methods available:

  • AIM (Accounting Income Method) – paying tax based on year to date taxable income with your monthly or two-monthly GST returns (note your accountant does this on your behalf via their tax software)
  • Paying instalments 3 times a year – 28 August, 15 January and 7 May
    (or twice yearly if on 6-monthly GST filing – 28 October and 7 May)
  • Making voluntary payments as you go – this will get ‘squared up’ when your tax return is filed
  • Using tax pooling to mitigate extra interest and other late fees.

The Inland Revenue calculator is a good tool to use to help determine what to be putting aside.

MBIE provide a good overview here. Tax obligations and planning can get technical. As well as gaining a general understanding of how business tax works we recommend discussing with your accounting professional.