Income tax Dates
AUG 28Provisional tax payments are due if you have a March balance date and use the standard, estimation or ratio options.
OCT 28Provisional tax payments are due if you have a March balance date and use the ratio option.
JAN 15Provisional tax payments are due if you have a March balance date and use the standard, estimation or ratio options.
Interest is not a penalty. It’s a charge for the use of money. This means we may:
- charge you interest on late provisional or end of year tax payments
- pay you interest if you overpay your provisional tax.
We'll work out the interest charges once you’ve filed your income tax return. We will not charge or pay interest if you under or overpay by $100 or less.
If you use the accounting income method (AIM)
- We will not pay you interest if you overpay your provisional tax.
- We’ll charge interest if you pay late or underpay your provisional tax, from the day after the instalment was due.
- Once a Statement of Activity is filed, we’ll charge penalties and interest from the day after the due date for each instalment. This is different from other provisional options where the penalties and interest will not be charged until the end of year income tax return is filed.
If you use the ratio option
- If you pay on time we will not charge or pay you interest on your provisional tax.
- We’ll charge interest if you owe more than $100 after your end of year tax due date (7 February, or 7 April if you have a tax agent with an extension of time).
- We may charge penalties if provisional instalments are paid late or underpaid.
If you use the standard option
We’ll charge or pay you interest from the day after the end of year tax due date if:
- you’ve made your payments in full and on time
- your residual income tax (RIT) is less than $60,000.
We’ll charge or pay you interest from the day after the final instalment date if:
- you’ve made your payments in full and on time
- your residual income tax is $60,000 or more.
We’ll work out interest on the difference between the provisional tax you’ve paid and your residual income tax.
If you’ve paid all but your final instalment in full and on time, we’ll charge interest from the final instalment due date. This allows you to make a payment that is different to your final standard instalment.
For the 2018 and 2019 income years if use the standard method then estimate your final instalment UOMI will be calculated as though you were using the standard method for the whole year.
For the 2020 income year onwards if you use the standard method then estimate your final instalment you will have UOMI calculated as if you estimated for the full Interest year.
If you pay an instalment late, or if you do not pay an instalment at all, we’ll charge interest from the day after the instalment due date. Interest is charged on the smaller of:
- the instalment minus the amount already paid
- your residual income tax divided by the number of instalments for the tax year, minus the amount already paid.
These rules may not apply to you if you’re associated persons and one of you:
- is a company that is not covered by the above standard option rules
- uses the GST ratio option
- has entered a provisional tax interest avoidance arrangement.
If you use the estimation option
- We’ll charge interest on late or missed payments in the same way as the standard option.
- If you underestimate your residual income tax, we’ll charge you penalties and interest on the difference, from the provisional instalment dates. You’ll be charged even if you paid your estimated provisional tax in full and on time.
This higher chance of penalties and interest is why it’s important to estimate your residual income tax carefully, and to estimate again if your income increases.
New provisional taxpayers
Special rules apply if you’re a new provisional taxpayer and you’ve started a taxable activity during the year.
We’ll calculate interest from the day after your first provisional instalment would have been due if:
- you use the estimation option and your residual income tax is more than $5,000
- your residual income tax is $60,000 or more and you’re a new provisional taxpayer for that particular income year.
If you’ve started a business and you think you’ll be in one of these situations, you may want to talk to a tax agent about estimating your income.
If you choose to become a provisional taxpayer and after your return is filed you’ve overpaid your provisional tax, you may receive credit interest. If you want to formally elect to become a provisional taxpayer, you’ll need to:
- have paid at least $5,000 by the final instalment date (7 May for most people)
- send your request at the same time as filing that year’s income tax return.
If you’re filing by paper, attach a letter to the return. If you’re filing online, send a secure mail on the same day that you file your return. Use the term ‘elect to be a provisional taxpayer’.