Provisional Tax
Provisional tax is how self-employed individuals, companies, and others with significant non-PAYE income pay their expected income tax during the year, rather than as a lump sum after year end. You're required to pay provisional tax if your residual income tax (RIT) in the previous year exceeded $5,000.
There are three calculation methods: standard (last year's RIT plus 5%), estimation (your own estimate of the current year's tax — useful if income has changed), and the Accounting Income Method (AIM, available through compatible accounting software for real-time provisional tax based on actual income).
Provisional tax is typically due in three instalments: 28 August, 15 January, and 7 May. If you use a tax agent, the dates shift to two payments. Late payments attract use-of-money interest, so it's important to manage your cash flow to meet these deadlines.
Related Terms
IRD
Inland Revenue Department (IRD), commonly known as Inland Revenue or simply IRD, is the New Zealand government agency responsible for collecting taxes, distributing social support payments, and enforcing tax compliance.
Income Tax
New Zealand income tax is calculated using a progressive bracket system.
Residual Income Tax (RIT)
Residual Income Tax (RIT) is your total income tax liability for the year minus any tax already paid through PAYE, RWT, and other tax credits.
Try the calculator
Use our free tool to see how provisional tax affects your tax.