The New Zealand Government recently passed legislation to increase the provisional tax threshold from $2,500 to $5,000. So, if you normally pay provisional tax on 28 August, you may now no longer have to and you shouldn't be alarmed if you do not receive the usual reminder notice and payment slip from us in the coming weeks.
The change in the provisional tax threshold means that a taxpayer with a residual tax liability of less than $5,000 will have until 7 April of the following year to pay their tax bill (assuming you are on our tax agency). The change is intended to lower compliance costs for smaller taxpayers and allow them to retain cash for longer.
This is a permanent change that will take effect from the 2020-2021 income year. For most taxpayers, this means the change came into effect from 1 April 2020.
If you would like to continue paying in instalments throughout the year, you can make a voluntary payment to IRD, or put aside money in a bank account until your tax payment is due. Alternatively, you may wish to deposit funds into a tax pool now, which can be transferred to IRD after your 2021 tax return is filed. If you are interested in this latter option, please contact us to discuss.
If you wish to know more you can read the IRD website link here
