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Whether section 183ABAB can provide relief from UOMI for provisional taxpayers depends on factors including the following. 

  • The date by which the tax was due to be paid (it must be on or after 14 February 2020).
  • The balance date (this determines the due dates for provisional tax and terminal tax).
  • The provisional tax method chosen or applied for the tax year (this determines the date UOMI will be charged from).
  • 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 the most common 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 proposed on 15th April 2020.

Section 183ABAB will be applied to provisional tax and terminal tax obligations for the 2020 and 2021 tax years. Information is also provided on provisional tax and UOMI which may be useful in considering provisional tax payment methods and UOMI consequences.

  • Scenarios 1 and 2 explain how section 183ABAB applies to provisional tax instalments.
  • Scenarios 3 to 8 explain how section 183ABAB applies to UOMI charged on terminal tax and how this is impacted by the method used to calculate provisional tax.

Where further scenarios and other information are identified these will be added as and when they are identified.

A provisional taxpayer has 3 instalments of provisional tax for the 2019 tax year and has a standard balance date of 31 March. These instalments are due to be paid on 28 August 2018, 15 January 2019 and 7 May 2019.

If any of these instalments are paid late section 183ABAB will not provide any relief as none of the instalments are due on or after 14 February 2020. UOMI will be charged, from the day after the due date of each unpaid instalment until the tax, late payment penalties and UOMI are paid.

The same facts as for Scenario 1, but the tax year is 2020. The provisional tax instalment due dates are 28 August 2019, 15 January 2020 and 7 May 2020. If either or both of the first 2 instalments are paid late section 183ABAB will not provide any relief. UOMI will then be charged from the day after the due date of each of these instalments.

If the last instalment is paid late section 183ABAB could provide relief if the late payment is due to COVID-19 as that due date is after 14 February 2020. UOMI would be charged from 8 May 2020 but could be remitted under section 183ABAB provided the late payment is due to COVID-19.

A provisional taxpayer has a standard balance date of 31 March, their 2019 terminal tax is due on 7 February 2020 and they met all of the criteria to be a safe harbour provisional taxpayer.

UOMI will be charged from 8 February 2020. If the terminal tax is paid late section 183ABAB will not provide any relief as that due date is not on or after 14 February 2020.

The same facts as for Scenario 3, but the 2019 terminal tax is due on 7 April 2020 as the provisional taxpayer has an extension of time via a tax agent.

UOMI will be charged from 8 April 2020. If the terminal tax is paid late section 183ABAB could provide relief as that due date was after 14 February 2020.

A provisional taxpayer has a standard balance date of 31 March, their 2019 terminal tax is due on 7 February 2020 and they are an estimator. For the person to have a terminal tax liability means their Residual Income Tax (RIT) is more than their estimated provisional tax.

Because the RIT of an estimator is spread across their provisional tax instalments UOMI could have started as early as from the day after their first instalment date. If the terminal tax is paid late section 183ABAB will not provide any relief as that due date is not on or after 14 February 2020.

The same facts as for Scenario 5, with the 2019 terminal tax being due on 7 April 2020 as the provisional taxpayer has an extension of time via a tax agent.

If the terminal tax is paid late section 183ABAB can provide relief as that due date is after 14 February 2020. However, the remission of UOMI is only in respect of the late paid terminal tax amount (that is, UOMI charged from 8 April 2020 on the terminal tax amount only), not in respect of either:

  • any provisional tax instalment amount that is not paid on time as the due dates for those provisional tax liabilities fall on 28 August 2018, 15 January 2019 and 7 May 2019
  • UOMI charged on the terminal tax up to and including 7 April 2020, because that portion of UOMI is not charged due to the late payment of the terminal tax (that is, that portion of the UOMI is always payable whether the terminal tax was paid on the due date or late).

A provisional taxpayer has a standard balance date of 31 March, their 2019 terminal tax is due on 7 February 2020 and they meet all the criteria of the UOMI concession rules in section 120KBB.

The UOMI concession rules apply where a person is not a safe harbour provisional taxpayer or an estimator and none of the other special UOMI apply. Under the UOMI concession rules if all provisional tax instalments are paid in full and on time UOMI will apply from the day after the last provisional tax instalment.

The person is deemed to have their RIT apply at their last instalment date (7 May 2019 in this example) for UOMI purposes even though their terminal tax date is 7 February 2020. UOMI will be charged from 8 May 2019. If the terminal tax is paid late, section 183ABAB will not provide any relief as their terminal tax is not due on or after 14 February 2020.

The same facts as for Scenario 7, with the 2019 terminal tax being due on 7 April 2020 as the provisional taxpayer has an extension of time via a tax agent.

The UOMI concession rules apply where a person is not a safe harbour provisional taxpayer or an estimator and none of the other special UOMI apply. Under the UOMI concession rules if all provisional tax instalments are paid in full and on time UOMI will apply from the day after the last provisional tax instalment.

The person is deemed to have their RIT apply at their last instalment date (7 May 2019 in this example) for UOMI purposes even though their terminal tax date is 7 April 2020. UOMI will be charged from 8 May 2019.

If the terminal tax is paid late section 183ABAB can provide relief as that due date is after 14 February 2020. However, the remission of UOMI is only in respect of the late paid terminal tax amount (that is, UOMI charged from 8 April 2020 on the terminal tax amount only), not in respect of UOMI charged up to and including 7 April 2020, because that portion of UOMI is not charged due to the late payment of the terminal tax (that is, that portion of the UOMI is always payable whether the terminal tax is paid on the due date or late).