The intent of the provisional tax system is to gain tax payments whilst income is being earned. These are effectively payments on account during the current tax year which are subject to a wash-up calculation (resulting in refund or further terminal tax liability) once the final income tax return is compiled and filed. Provisional tax payments are made in instalments, the number and frequency of which will depend on… Read more
IRD are promoting AIM (Accounting Income Method) pretty hard as they envisage great benefits in adopting this method of paying provisional tax. We agree mostly and see some significant advantages, including:- · Promoting best practice by ensuring regular reporting and assessment · Increasing contact with key advisors (in this case us) · Promoting financial awareness by introducing accounting adjustments and ensuring you understand and acknowledge these · Better aligning… Read more
Provisional tax is effectively a progress payment to ensure that tax is being paid by most taxpayers as they earn their income throughout the year. It is paid in instalments, the number of which can depend on your GST filing cycle. You become a provisional taxpayer when your Residual Income Tax (RIT = end-of-year income tax less any tax paid at source) is greater than $2,500. There are 4… Read more