Curtis McLean

The Inland Revenue Department has changed the due dates for provisional tax.
From 1 April 2008 provisional tax payments will be aligned with GST payments.

The number of provisional tax instalments will depend on the option you use to calculate your provisional tax payments and your GST filing frequency.

There will be a new option, called the ratio option, for calculating your provisional tax payments if you qualify.  The ratio option is based on a percentage of your GST taxable supplies so it’ll reflect your cash flow. It’s designed to benefit small to medium-sized businesses but will not suit all businesses.
You can use the ratio option, if you meet all of the following criteria:

• you’ve been in business and GST-registered for all of the previous income year, and part of the income year prior to that
• your residual income tax (RIT) for the previous year is greater than $2500 and up to $150,000
• you file your GST returns monthly or two-monthly
• the business you’re operating is not a partnership
• your ratio percentage is between 0% and 100% (we’ll let you know if it’s not).

If you would like to use the ratio option for the next financial year please contact us.