Provisional tax
Provisional tax will be reduced for individuals who pay provisional tax on the "earlier year basis" (for example, using the uplift basis) from 1 October 2010. This is to reflect reductions in the personal income tax rates.
Standard option
To calculate instalments payable on or after 1 October 2010 (for the 2011 income year) and for all instalments in the 2012 income year:
Take your RIT from your last income tax return less 5%.
If the result of this calculation is less than $2,500, then you will not be required to make any provisional tax payments for that income year, as you’ll be below the required threshold.
After the 2012 income year, the formula will gradually change back to normal, becoming standard in the 2014 income year.
See the table below for details:
|
Year for provisional tax being calculated |
Year of RIT amount used | Adjustment |
|---|---|---|
| 2011 | 2009 | RIT x 95% |
| 2010 | RIT x 95% | |
| 2012 | 2010 | RIT x 95% |
| 2011 | RIT x 95% | |
| 2013 | 2011 | RIT (no adjustment) |
| 2012 | RIT + 5% | |
| 2014 | 2012 (back to original calculation) | RIT + 10% |
| 2013 (back to original calculation) | RIT + 5% |
Ratio option
The change in tax rates for the 2011 and 2012 income year affects how your ratio percentage is calculated as follows:
| Year | RIT previous year | RIT year before proceeding | RIT two years before proceeding |
|---|---|---|---|
| 2011 |
(2010 RIT - 10%) (2010 taxable supplies - asset adjustments) x 100 |
(2009 RIT - 15%) (2009 taxable supplies - asset adjustments) x 100 |
(2008 RIT - 20%) (2008 taxable supplies - asset adjustments) x 100 |
| 2012 |
(2011 RIT - 10%) (2011 taxable supplies - asset adjustments) x 100 |
(2010 RIT - 15%) (2010 taxable supplies - asset adjustments) x 100 |
(2009 RIT - 20%) (2009 taxable supplies - asset adjustments) x 100 |
| 2013 |
2012 RIT (original formula) (2012 taxable supplies - asset adjustments) x 100 |
(2011 RIT - 10%) (2011 taxable supplies - asset adjustments) x 100 |
(2010 RIT - 15%) (2010 taxable supplies - asset adjustments) x 100 |
| 2014 |
2013 RIT (original formula) (2013 taxable supplies - asset adjustments) x 100 |
2012 RIT (original formula) (2012 taxable supplies - asset adjustments) x 100 |
(2011 RIT -10%) (2011 taxable supplies - asset adjustments) x 100 |
Find out more information on the changes to provisional tax.
Note
If your income has changed or changes as a result of any of the other tax changes announced in the Budget, you may want to consider the impact this has on future provisional tax payments.
Date published: 01 Oct 2010
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