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Te tāke tārewa Provisional tax

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Provisional tax helps you manage your income tax. You pay in instalments during the year instead of a lump sum at the end of the year.

You will have to pay provisional tax if you had to pay more than $2,500 tax at the end of the year from your last return. It's payable the following year after your tax return.

Provisional taxpayers often earn:

  • self-employed income
  • rental income
  • income earned as a contractor
  • income from a partnership
  • overseas income.

Early payment discount

If you use the standard or estimation option, you can make voluntary payments in your first year of business. You can also qualify for an early payment discount of 6.7%. This discount is the lesser of:

  • the total amount of your voluntary payments
  • 105% of your end-of-year tax.

We deduct the discount from your end-of-year tax.

Tax pooling your provisional tax payments

This lets you pool your payments together with other people through a tax pooling intermediary. The intermediary will use the money to pay your provisional tax to us on your behalf. Underpayments are offset by any overpayments made within the pool.

If you use the accounting income method you cannot use tax pooling during the year. You can use if for year-end tax payments.

Provisional tax and myIR

You can use myIR to see:

  • how much provisional tax is due
  • any provisional tax payments you’ve made
  • a running balance (making it easier to get refunds)
  • imputation credit account or Māori authority credit information.

You can also use myIR to estimate your provisional tax.