• Provisional Changes Reduces Pain in the Proverbial

As chartered accountants few experiences are less enjoyable than provisional tax time.

As chartered accountants few experiences are less enjoyable than provisional tax time. For those unfamiliar with the current system, it involves significant guestimates of future taxes before full year results are known. The current system also slams underpayers with interest and sometimes penalties while paying around 1% interest to those that overpay, all while claiming that the IRD “is not a bank”.

In response to feedback, the government made the following changes to the provisional tax system which will start taking effect from 1 April 2017. For many the changes will start to take effect at the next provisional instalment date on 28 August 2017 relating to tax payable for the 2018 tax year.

Increasing Interest Thresholds

The past provisional tax system charged interest to those who had a tax bill of over $50,000 for individuals or $2,500 for companies and trusts. This threshold has now been increased to $60,000 for all tax payers as long as the standard amount of tax is paid by each due date. This will mean that as long as you pay the standard amounts by the due dates and have under $60,000 total tax payable you won’t be charged interest.

Removing Interest

The changes also mean that no interest will be charged on the first 2 provisional tax dates (usually 28 August and 15 January) if the standard amount of provisional tax is paid on these dates instead of from each provisional tax date. Therefore, if these amounts are not enough to cover your final tax bill and the

total tax to pay is more than $60,000, the IRD will only charge interest from the final May 7 payment. By which time you should have a fair idea of the expected profit. This will save you time estimating the amount to pay, as well as interest should you get it wrong.

New Calculation Method

Many businesses operate on some form of cloud based software and therefore have a reasonable idea of their profit throughout the year. As such, the Government has introduced a new calculation method dubbed the “Accounting Income Method”. This method will be available from 1 April 2018 for the 2019 income year.

Using this method, each time a GST return is filed (or twice a year if not GST registered), interim financial information is also filed with IRD and, based on this information, provisional tax is calculated. When the end of year tax return is finalised, a washup amount of tax is payable at the terminal tax date with no interest charged. While attractive at first glance there are some fishhooks that may make this unattractive to some taxpayers.

The Accounting Income Method relies on reliable coding throughout the year with minimal year-end adjustments. To avoid this being taken advantage of the IRD will charge a 20% penalty to anyone they consider have not taken “reasonable care”. How aggressively the IRD will charge these penalties is unclear. Those with multiple entities doing transactions with each other should be particularly wary of using this method.

As provisional tax payable using this method is based on year to date income, those with income concentrated at the start of the year will have large tax bills at the start of the year. This may unnecessarily stress cashflow whereas using another method to delay payment may be more appropriate.


While the changes are positive overall, giving everyone more choice and flexibility in managing their tax payments, there are still many pitfalls and traps. There are a number of options available to navigate this new world of provisional tax.

To ensure you don’t get bit in the proverbial by provisional tax pain please contact Q2 Ltd before making any decisions about paying provisional tax.

Call 09 222 448 or email info@q2.net.nz to book a free consultation

All Comments

  • Jesqwwwsenum

    Jesqwwwsenum 6 months ago

    How anyone win at Roulette? Well, type ‘winning roulette system’ into Google and you can see around 863,000 entries - most of such promising to offer you a magic, 100% guaranteed system that could make you wealthy in something of days and weeks time.

    The next step is added with the an opportunity to use any practice play provided by the review casino online. Points that avoid using need to very carefully avoid on this page are not knowing dive to playing blackjack online without ensuring you simply are understand of strategy and discover the easy way to manage your poker bankroll. Practice play is provided by nearly all casinos, when you cannot win any jackpots you make sure that comprehend the game, blackjack strategy and phrases in quite best position possible in order to win some money at pontoon.

    You could win large money by playing any kind of your favorite online games like blackjack, roulette or poker. A person could come across the heavy money by playing each of the most fun online games like Deal or no Deal, Tiki Temple, Gold Mine, Diamonds are forever, Tycoon Treasure, Bingo 90, Bingo 75 or even Jacks maybe better Pay dirt. Whatever is your hot game, you stand a fair chance of winning the jackpot in the ace online casino. There are a many treasure pots within all these games and it is easy to easily acquire their hands on some good cash even by investing a few cents.

    What do you know about the internet slot machine games? Well here are a few interesting facts about online slots that continue from their real life counterparts. No-cost use computer chips create the winning combinations. These computer chips use random number generators to process what your next combination are usually. Whether it is an absolute combination or not is solely based with this particular process.

    Players at also have the choice of playing it for totally free of charge. That means you can begin to play with no deposits required and no real earnings. Slot fans don’t risk their money but they experience the excitement with the game. It is simply like playing at any land based casinos. Tend to be mostly a match of chance but the player’s behavior with relation to his betting can greatly affect his win and loss ratio.

    Some on the casino houses provide multiple options a person. From the menu you can choose the table of selection and you join furthermore the live dealer likewise other folks who are real and play the games with them. It is a welcome departure from the stereotyped many casinos with free slots you played earlier where most system of the game was regulated through computer or software regimens. Some of the casino house present you twenty variations among the Live Dealer Casino video. The choice is with you. Providing live dealers cost the casino house money. Yet the provide such facilities and within such number means that they understand recognition of the types as well as not in order to attract beginners to the games but also ensure that current players remain glued to their games.

    You are reinforced by the choice of combining any of the roulette bets in the casino and can choose any grouping. First roulette inside bets, it’s about the numbers in the inner portion of online roulette table and then another put the bets on some specific number.

    If an isolated casino meets all these requirements then you might go ahead and take part in. Keep in mind that you are usually an online casino to relish yourself. Do exactly that. Be certain that you’re registered by having an online casino of repute and accomplish shady certain.

  • 86Lila

    86Lila 6 months ago

    I see you don’t monetize your site, don’t waste your traffic, you can earn extra bucks every month because you’ve got hi
    quality content. If you want to know what is the best adsense alternative, search in google: adsense alternative Mertiso’s tips

  • Stephenveili

    Stephenveili 6 months ago

    Online casinos let you play those games twenty four hours a day, 7 days a week from enjoyment of own personal home, like Blackjack, Keno, Texas Hold ‘Em, Craps, even video poker machines. You can play for free home entertainment - or go for that cash and play genuine.

    Web-based games are best known as as Internet games also know as the games will be played on the network. The web-based games are growing very popularity in today’s scenario when people do not possess enough a person to go on the clubs or to the play grounds. The web-based games could be anything like online car racing, review casino online gambling, poker, online soccer playing, cricket or any item. These games are great in the and works very properly for persons around earth.

    If you are gaming, much more good sense to opt for the games that tend to be to spend. The chances of winning at craps are in general compared to any other casino games of n opportunity. Nevertheless, this does not mean you will need to constantly play dice. One armed bandits have the prospects of winning squarely tipped favoring the use of the house, but towards the upside they pay out much more often, winning more inclusive.

    When you gamble having a land casino, you get so overly enthusiastic by environmental surroundings and folks around you that you forget to note a therapy for yourself. But in the case you play at an online casino, you ca specified that you will remain with your limits. You’re able to take ones own time and play at a own price. Learn the bet and then go for greater stakes. Ought to not need to pay the online casino anything to play, one does win and grab bonuses acquire the cash, if you lose, you are going to lose anything much. You don’t need to worry about getting overly enthusiastic and realizing you have become a pauper at the end of the business.

    For those that want perform but not have any idea yet how functions and they you can win from it, the become a great help. Through these games, you’ll be able to familiarize yourself with each games and styles, and also the jackpot prizes, prior to play the actual game twiddling with real money.

    Some of the casino houses provide multiple options to you. From the menu you can come up the table of your choice and you join not necessarily the live dealer however other those people who are real and play the games these. It is a welcome departure from the stereotyped many casinos with free slots you used to play earlier where most perhaps the game was regulated through computer or software systems. Some of the casino house offers you twenty variations from the Live Dealer Casino computer games. The choice is with you. Providing live dealers cost the casino house money. Yet the provide such facilities too such number means which understand acceptance of the overall game types want not in order to attract new players to the games likewise ensure that current players remain glued to their games.

    If we win, then we get back $10. Which takes care of our previous round of $5 loss, and earns us $5. This method usually works in the short term, but because there’s a house limit, the level of double up we go is limited as easily. Meaning to say we can’t double up forever until $10000 dollars.

    Playing slot machine games s incredibly exciting and interesting in the casino. It amuses as well as also, there is an prospect to earn decent money out with it. It end up being a land based casino or an on the net casino; people love the charm of the slot machine games.

We support