Section 183ABAC applies to the 2021 tax year terminal tax on which UOMI is imposed in relation to provisional tax instalment dates, where the provisional tax method used was the standard method or the estimation method. Whether section 183ABAC can provide relief from UOMI for provisional taxpayers for the 2021 tax year depends on the following factors:
- The 2020-21 residual income tax (RIT) must be at least $5,000 and less than $1 million.
- The taxpayer’s ability to make a reasonably accurate forecast of their 2021 RIT for the purposes of paying their 2021 provisional tax obligations was significantly adversely affected by COVID-19 and as a consequence the taxpayer failed to pay the relevant portions of their provisional tax by the relevant instalment dates.
- The UOMI liability does not arise from an election under section IZ 8 (loss carry backs) of the Income Tax Act 2007, or by a company in the same group of companies as the provisional taxpayer.
- Whether the taxpayer made all their instalments in full and on time and has RIT of less than $60,000. (This would mean they fall withing the safe harbour rules, and therefore do not incur UOMI for late or underpaid provisional tax).
- As at their last instalment date the taxpayer’s provisional tax obligations were based on the standard method or the estimation method.
- When payments were made and how they were applied to amounts owing in the income tax account.
The following scenarios are intended to provide guidance for some situations that Inland Revenue has identified. The scenarios have been drafted based on current law and may change as a result of the additional legislation changes.
The relief available under section 183ABAC is in addition to any relief that may be available under section 183ABAB.