Provisional Tax
There are two ways to pay tax from income derived in NZ.
1. Most people have tax deducted from their income at
source. This is PAYE or withholding tax.
2. For self-employed people, or those who receive a
shareholder salary or income from a trust,
there is provisional tax.
If you are a provisional taxpayer, then your income is estimated (there are various ways to do this) or is based on last year's income (with an automatic up-lift) and you pay tax in three lump sums during (and just after) the financial year. When your annual financial reports and tax return are completed, we then know how much tax was actually payable, and work out if you have terminal tax to pay or if you are entitled to a refund.
It can be tricky for some people to estimate their income in advance, so another option is to link your provisional tax payments to your GST returns, and there is a formula for working out how much of your sales income should be paid as provisional tax based on previous years' ratios. Talk to us if you want to pursue this option.
Provisional Tax Payment dates for the financial year ended 31/3/2011 are:
28 August 2010 (1/3 tax due)
15 January 2011 (1/3 tax due)
7 May 2011 (1/3 tax due)
with Terminal Tax (if any) due 7 April 2012.
There are two ways to pay tax from income derived in NZ.
1. Most people have tax deducted from their income at
source. This is PAYE or withholding tax.
2. For self-employed people, or those who receive a
shareholder salary or income from a trust,
there is provisional tax.
If you are a provisional taxpayer, then your income is estimated (there are various ways to do this) or is based on last year's income (with an automatic up-lift) and you pay tax in three lump sums during (and just after) the financial year. When your annual financial reports and tax return are completed, we then know how much tax was actually payable, and work out if you have terminal tax to pay or if you are entitled to a refund.
It can be tricky for some people to estimate their income in advance, so another option is to link your provisional tax payments to your GST returns, and there is a formula for working out how much of your sales income should be paid as provisional tax based on previous years' ratios. Talk to us if you want to pursue this option.
Provisional Tax Payment dates for the financial year ended 31/3/2011 are:
28 August 2010 (1/3 tax due)
15 January 2011 (1/3 tax due)
7 May 2011 (1/3 tax due)
with Terminal Tax (if any) due 7 April 2012.
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Website Created and hosted by www.leighshaw.co.nz