A brief overview Provisional tax breaks up the income tax you pay Inland Revenue IRD so that it is paid throughout the year as opposed to one giant sum at the end of the year. Options to calculate provisional tax Four options are available to calculate your provisional tax.
Each option suits different businesses, so it pays to do your homework first. Number of payments Apart from the GST ratio method six payments and AIM up to six or 12 payments depending on your GST filing frequency , provisional tax is generally paid three times a year. You will only make two payments if you pay GST every six months. After paying provisional tax When you file your income tax return and calculate your RIT for the year, you deduct the provisional tax you paid earlier.
If you have paid more provisional tax than you actually owe, you will receive a refund from IRD. This shortfall may also incur IRD interest currently seven percent. In short, bad things.
As well as incurring IRD interest from the date payment was due, late payment penalties may be charged as follows: One percent the day after the payment was due. An additional four percent if the tax amount including late payment penalties is not paid after seven days. As always, we recommend you speak to your accountant if you have any questions. Leave a Reply Cancel Reply. How can you attract an investor to your business?
Share : Facebook Twitter Linkedin. Be Informed Be Informed is William Buck's regular newsletter, filled with up to date news and relevant advice for individuals and businesses. Get in touch! Thank you. Someone will be in touch shortly. Newsroom Client Portal Contact. New Zealand. Once you've worked out what you owe, the due date of your first tax bill for the year ending 31 March will be 7 February the following calendar year or it may be extended to 7 April if you have an accountant or tax agent.
Tax on schedular payments used to be called withholding tax. It means you may have tax taken from your pay at source, similar to pay as you earn PAYE. All contractors can pick the rate to have tax deducted.
Complete the new tax rate notification form IRC. On this form you pick the rate to have tax deducted from your pay. New Zealand tax residents can pick any rate from 10 per cent up to per cent. Tax rate estimation tool for contractors external link — Inland Revenue. Your income tax return is due on 7 July each year, unless you have an extension.
If you have an accountant or tax agent, they may also get an extension. You can file all your returns online, or download the forms you need from the Inland Revenue website. Forms and guides external link — Inland Revenue. Include the total amounts for all your different business expense types in your return — you don't have to provide the receipts to Inland Revenue unless requested to do so, but you do need to keep them for at least seven years. Quiz: Claiming expenses. Visual Guide: What to claim if you're working from home.
It's a bit like claiming expenses, but instead of claiming against the total cost of the item, you claim for the amount it depreciates each year — that is, the value lost through wear and tear or becoming out of date. Depreciation external link — Inland Revenue. The amount of provisional tax you pay is based on your expected profit for the year. There are four ways to calculate it. If you use the standard or estimation option, you'll usually pay provisional tax in three instalments, in August, January and May.
If you choose the ratio option for provisional tax, you'll pay in six instalments. When you file your income tax return and calculate your tax for the year, you deduct the provisional tax you paid earlier. If your provisional tax paid is more than your RIT, you'll get a refund and may receive interest on the difference.
In some cases, if your provisional tax paid is less than your RIT, Inland Revenue may charge you interest on the amount owing and a penalty. Provisional tax guide external link — Inland Revenue. Tax due date calculator external link — Inland Revenue. Provisional tax payment dates external link — Inland Revenue.
0コメント