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Business Tax

How could provisional tax be improved?

Provisional tax is the mechanism by which most businesses pay tax during the year.  The exact amount of tax to pay for an income year can only be determined after the year has ended.  The provisional tax rules, however, are designed to ensure that tax is paid during the year, rather than at the end. 

For example, the calculation and payment of business income tax could be based more on when income is earned during the year – much like a PAYE for business.  This has the potential to simplify the calculation of provisional tax, create more certainty for businesses, and better reflect cashflow.  Alternatively, a simplified system where provisional tax payments are based on another proxy (for example, a percentage tailored on a business’s turnover) could also be investigated.

How important is improving the provisional tax rules in reducing compliance costs for business?  Are there other more important issues the Government should be focusing on instead, or as well?

The Government seeks feedback on ideas for more effective, practical and simple methods of calculating and paying provisional tax. How could provisional tax be better aligned to other business processes?

Comments

Sandy
Provisional tax is a significant hurdle for small businesses with variable and unpredictable incomes that vary from one year to the next. It sets up financial milestones and commitments that often do not relate to the financial and business situation of the point in time when they are due, and this causes cash flow problems and inhibits investment. A more responsive 'pay as you earn' system, three or six monthly similar to the online GST system would be more practical, with any correction able to be managed after the year end, and the accounts are undertaken, in similar fashion to personal income tax, would be better. A more responsive system, that can react to variable nature of business but still permits accurate and dependable correction (if need be) at the year end. Cheers, Sandy.

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1 year ago
Cameron Thorpe
I believe it should be scrapped entirely. It causes a headache for those who don't understand it, causes financial costs in order to be compliant and you are essentially paying for what you don't necessarily earn. If it is to stay it should only be compulsory for the larger business who can afford to be compliant and it can be a quick job for their accountant anyway for the most part

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1 year ago
Warwick
We have run a Farming business for over 30 years. Our prediction of provisional tax has NEVER been correct. Our income regularly fluctuates from profit to loss one year to the next. (such is the nature of farming.) We are often having to ask the question - have we got our provisional tax right, do we need to alter it? And good seasons or bad don't take much notice of balance dates. A pay as you go system at the same dates of GST payments would be fairer for us and the IRD, (as long as IRD accepted that some businesses only receive one income payment a year.)

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1 year ago
Catherine Orr
Provisional tax as it currently is disadvantages a small business owner on maternity leave. You have to pay tax based on the previous year's work, but it's difficult to forecast income for the year off as you don't know when you'll go back to work and how many hours you'll do. Because of the heavy penalties imposed for incorrectly estimating income down, you end up paying provisional tax out of your own pocket, and then have to wait until the end of the financial year to claim it back. A system that estimated tax as you earned would be more fair and less stressful.

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1 year ago
Robb Donze
In the 20 years we have been in business, our company's profit takes place in the last half of the year. I have no idea what it will be and if I get it wrong & underestimate by a bit we are penalized. If I er on the side of caution, I over pay and it means I am taking money out of the business just when I need the cash flow. IRD gets it both ways. Wish my business had the same luxury that IRD has. It gets our money up front before we even make the profit.

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1 year ago
Gray
I think Provisional Tax estimation should definitely be scrapped along with use of money interest. The estimation system has always been problematic. Perhaps the provisional tax threshold should be raised to a net income of $60k -$100k? Currently this is around the $20k mark. This would solve a few problem for cash flow for SME's. Over this amount could be paid via a PAYE system, but based on what! As we all know SME income/profit can fluctuate a lot during the year, depending on there industry and the economy. A PAYE system based on GST returns is also problematic - what about non-GST items. Maybe a percentage of turnover as low as 2%?? This would be similar to the withholding tax system. In the end, there is no simple solution.

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1 year ago
carlie
we changed over from a 1000 cow dairy farming contract job to our own farm with just 30 cows. the whole provisional tax side can make things extremely difficult for us to keep our heads above water and are to reliant on a good job from accountants (who can charge what ever they want). if we as small business can calculate our own prov.tax just as paye it makes it easier because we straight away know what when to pay and do not have to rely on accountants for it (which saves costs again as well).

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1 year ago
Keith Smith
Sounds like we have a very clear majority of SME owners thinking that the current provisional tax system is fundamentally flawed and is actually hurting our businesses. It does not allow for fluctuating incomes so it has to go - and the sooner the better. It seems clear that people would prefer a bi-monthly payment, in line with GST returns. All we need now is sensible formula, linked to actual sales, that allows both the government to raise its taxes and for businesses to even out tax payments. I think it would also make sense to link ACC payments into this system as well. I am totally fed up of getting large ACC bills at exactly the same time as we are struggling to pay the Prov. Tax, final tax etc. Let's have an on-line return, same as the current GST return that includes GST, Provisional Tax and ACC. As they are all linked to the actual sales figures over the past two months then no business should have a problem with that. The shift to on-line GST returning was such a great move - it has made our GST returns so much quicker and easier - don't see why we can't do the same for Prov. tax and ACC.

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1 year ago
derek Browne
Re Prov. tax...it's very hard to estimate what you're going to earn being a small business - it's so dependent on factors outside of our domain. I agree with the idea of lessening provisional tax - not too worried about when you pay it, but as a small business it would be very helpful. 10% sounds reasonable, then final payment end of FY.

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1 year ago
TJ
I feel paying Prov tax with GST payments would be preferable. If you are a contractor I feel a PAYE system would also be a great idea.

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1 year ago
KH
Most of the writers seem to have relatively simple businesses - as in operating in one sector only. Some of us have a lot more complexity. Absolutely opposed to any sort of PAYE type Provisional tax option including bi-monthly payments in line with GST returns as do not need the extra work of doing a two monthly P&L to calculate the tax. It is a challenge to estimate next year’s income but we see it as part of the job. Those who want to make payments as they go can do so (see Brian Boys comment) Also absolutely opposed to any suggestion of accounting systems doing some sort of auto-tax calculation/ integration with the IRD’s systems. Might be fine for simple systems but not for all and should never be compulsory. My first personal gripe is the 5% increase being applied to the standard option – it is not reasonable or equitable to assume our taxable profit will be 5% more. Last years profit as standard option is reasonable and then estimate as soon as you know things are significantly different (if they are). My second gripe is the rates of interest – the IRD will make a profit on the overpayments as the rate taxpayers get is far below what banks pay even for Call and less than what the IRD should be getting. This is grossly inequitable. Even worse would be linking ACC in any way shape or form (more than it already is) with the IRD. IRD (& WINZ, DSW etc. generally do a good job) and do not need to be burdened with the mess that is ACC. ACC has systemic problems both with what they do (claimants) and how they do it (business systems). As for large unexpected bills - one expects to get an ACC bill just like any other bill. You can roughly estimate this using your payroll and rates off ACC website. The real surprise is when they randomly do things like close your business down (even though you are still filing IREMS s and IR345s on time to the IRD every month) AND once you discover this and get it sorted out you think (losing around 5 days productive work in the meantime AND you think your account is up to date again THEN- ACC send you large 4 figure unexpected bills because it wasn’t AND do transfer between accounts without your knowledge and consent (with the IRD you give consent to transfers between IRD numbers). Incidentally ACC can’t issue credit motes for all transactions or statements etc – would be great if the IRD insisted the ACC got their business systems in order.

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1 year ago
Brian Whetton
I agree that the IRD's 5% increase assessment is unfair. Businesses are unable to predict market trends; accept the previous year's figures as a base. Penalty interest rates require review or reassessed according to the tax payer's situation; a more flexible approach may assist tax payers and boost IRD's reputation for being fair and un-biased. I do not think that the IRD's computer systems should be linked to business systems; smacks of invasion of privacy. However, some companies may not object; should be optional; something to consider.

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1 year ago
Deborah Wall
As a small business it is ludicrous to expect that tax for the last year & next year are paid from our cashflow of this year. It takes a while to get on your feet with a new business and to be paying so much in tax means that the business cannot grow until years after it starts. My tax is paid on the due date every time and has meant a lot of "growth" sacrifices. Please put it in line with GST payments and make us pay for what "has" been earned rather than guessing what we "should" be earning. My husband is a builder and we set his company up 6 years ago. He goes from 1 tax year of $600k sales to next tax year of $50k sales. He consistently says that the business is stifled due to provisional tax obligations. And charging interest if we get the "expected" income wrong is not efficient. Our largest Accountancy expense is GST so it should be in line with this & sent to IRD the same way the GST system is working.

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1 year ago
Mike Brearton
PAYE-like option would be awesome... as long as electing that option doesn't introduce penalties for missing a month or missing a "filing" deadline. Yes, I want to pay-as-I-go. And yes, I take Xmas vacations... during which I don't want to worry about any tax form submission deadlines. If there are going to be deadlines and penalties... then fewer times per year is better.

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1 year ago
Dennis
When we started in business many years ago the advice we got was to put away 10% of our GST inclusive turnover every month. It was more than adequate to sort provisional and eventual terminal tax. Provisional tax, penalties or the pitiful interest paid if you paid too much are totally unfair.

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1 year ago
Brian Whetton
Greetings. Although not a provisional tax payer now, I found it very stressful when I was. I never knew the amount that the IRD would want on the 1st assessment. I think that provisional tax payers should be given the option of being classed the same as wage earners and "PAYE" IF THEY WANT THIS option. This is what I did as a "provisional" and it eased the tax burden at time of demand. Payments of tax could be @ 20%, 25% or 30% of earnings & paid monthly. I do not think that it should be "written in stone" but an agreement between the taxpayer and his/her IRD advisor. I thought that it was unfair that the IRD assessed Provisional Tax on the previous year's earnings as often income fluctuated. The suggested method provides the Govt. with a smoother level of tax revenue during the year and possibly may lead to more accurate forecasts for statistical purposes.

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1 year ago
Greg
The use of money provisions of the Prov Tax regime are grossly unfair to SMEs. The difference in the two interest rates penalises risk taking and investment. I understand there needs to be incentives to pay tax in a timely fashion, but the interest rate differential is currently loaded against the SME. In our case, a better system would be to ignore profit forecasts and to pay tax based on NPBT as the year progresses, from anywhere between monthly to quarterly. Our accounting system tells us by about the 24th of each month what the monthly NPBT is hence what the YTD NPBT is. If for example, we make a profit in April, we would pay tax accordingly. If May sees a loss then we would get tax back and, if the loss exceeds the profit in April, have tax losses to offset profits in June, July, and so on. By the end of the FY our total tax payment would be very close to the final, correct amount. Tax would be paid as profit is earned. Couldn't be much simpler.

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1 year ago
peter greenall
I think there should be an option to pay provisional tax monthly, therefore it will be easier to pay I think all tax returns should be filed by 6 weeks after balance date, then tough penalties kick in, tax agents grace period for late returns should be removed, this will allow correct calculation of monthly provisional tax Balance dates should be able to be changed easily to any month in the year - once each 5 years, to assist tax agents balance there work loads

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1 year ago
KH
Re - " I think all tax returns should be filed by 6 weeks after balance date..." shows a complete lack of understanding of the complexity of the business (es) from which people obtain their taxable income. In addition, even if this were possible it would create a huge spike of work for the IRD who would then have to spend weeks trying to work through it - far more sensible to smooth the work load. Complete and accurate information is needed to estimate provisional tax and that is not possible in six weeks after balance date for many self-employed and employers

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1 year ago
Nigel Parry
Provisional tax is THE most important improvement you can make for our business. The current system is awful. It is flawed in two ways; it can penalise well run businesses that focus on their business or burdens them with too much work for IRD through the year, and it incentivises bad business practice - panic buying at the end of the tax year to head off tax penalties rather than investment for sound business reasons. It is a one way bet in the Govt's favour and businesses will, on average, lose out due to the disparity in over/under payment interest charges. A system based on revenue through the year wont work either as it fails to take into account investment in plant and equipment that businesses need for their future but only calculate the depreciation at the end of the financial year. By far the best (simplest and fairest) system is to allow businesses to run as they wish, calculate tax and the end of the year and no interest either way. A proportion of GST also has some merit - in fact it makes businesses who invest in equipment potentially better off as they reclaim the full GST but only partial capital cost. Please make it VERY simple to administer and TOTALLY fair.

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1 year ago
Prue Scott
Provisional tax can be a real issue when you're a freelance writer/editor. Income is not consistent month on month. Paying as I earn would be far more helpful. Must be electronic and simple.

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1 year ago
Chris Wadsworth
Paying tax based on what is actually being earned rather than an estimated annual amount would help cash flow. It's easy to look back on the past 2, 4 or 6 months accounts and pay provisional tax based that. Flexibility around payment times would help too. Some people will want to pay every 1 or 2 months so they don't have to worry about spending the tax money before it's due. Others will want to pay every 4 or 6 months so they don't have so much form filling to do. Being able to register how often you pay tax would give everyone what works best for them (like GST currently). Maybe for time periods where losses are made people should be able to claim a tax rebate. The last payment of the year gives everyone a chance to make a final calculation and pay the required tax for the whole year. There should be a threshold to allow for errors so you don't get penalties or interest if the end annual total is within a specific % of what you owe, but anything owing would need to be paid in a timely manner.

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1 year ago
Alex Korban
I think the provisional tax should be removed altogether. Like other people have said, it's a penalty on small businesses with variable revenues. I see no reason why income tax can't be paid after the end of the financial year. The only benefit of provisional tax seems to be for the government, not for businesses.

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1 year ago
Hanna Krause
A couple more thoughts on income tax from a very small business owner: 1)Could the algorithm to calculate provisional tax be changed to look at more than just the past year to help determine weather a particularly good year is a blip or a trend? 2) Provisional tax is presumably there, so that the government doesn't have to wait too long to be paid tax, which is fair enough. So why do I have almost a year from the end of the tax year to pay any current tax (if applicable), while at the same time paying provisional tax for the new year in my case in October and May? Could the income level at which a small business has to pay provisional tax at all be brought up, if income tax was paid in a more timely manner? Besides it's confusing (and I hope I have this right in the first place..) 3) This is a bit off topic as far as provisional tax is concerned, but would make income tax fairer and easier in my opinion: why have fixed assets? If I pay for my new workbench in full this year, why can't I write it off the same year? Maybe it somehow makes sense for bigger businesses, but in my case it just creates unnecessary paperwork and distorts my expenses.

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1 year ago
Nicky Currey
A change in how provisional tax is calculated is required.... Maybe monthly like PAYE or even bimonthly like GST. It can be a big hit for a small company to pay large sums of tax especially if you are having a good year.

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1 year ago
Kay Griffiths
Yes - make tax for businesses and self employed more aligned with what is actually being earned at the time - it is such a big strain on a business to keep up with provisional when there is the 5% growth automatically added on - this is not realistic in todays economy. Im sure there are some smart people out there that can work out a digital system for doing this effectively.

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1 year ago
Roy Chee
Bit of a plan here: Each transaction a business makes whether debit or credit could be tagged with the business IRD Number. Through the banking system that transaction could then have an appropriate tax deducted from it or credited to it straight to IRD. Cash cards and Visa Cards etc can also be tagged with the IRD Number and the same process could apply. Each business could have access to their IRD transaction account which would need to be real time. An opportunity to correct any incorrect transactions could be made annually if required. An accountant or IRD could set the tax rate and this could be altered if justified. Pie in the sky????????

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1 year ago
KH
Aside from the systems complexity and expense to build issues, the Privacy issues and the issues for those who can't or don't manage their life on-line (covered elsewhere in responses to the Green Paper), how is the bank system or Credit card going to know which are private and which are business? Not everyone wishes to, needs to, or wants to incur the extra expense, of multiple bank accounts and credit cards for business and non business. Not all are limited companies either. Cash transactions would not be captured nor would taxable adjustment such as depreciation (and only bringing these in at the end would result in overpaying tax throughout the year. And what is an “appropriate tax” best guess of the year end result (so same problems as estimating is now)? Would the rate be changed every year?

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1 year ago
Ian Cassidy
I think provisional tax should be either eliminated or optional. In my situation there is a family trust that owns rental properties and I get paid out from the trust once the rental returns have been completed. I don't see why I should have to pay provisional tax in this case. It would be much simpler if I had the option to opt out of provisional tax and just pay the tax on the money once the profit has been calculated and transferred to me as beneficiary. I think it is an unfair burden on businesses. They may have a good year and therefore have a large amount of provisional tax to pay but the next year may be a financial disaster for the business.

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1 year ago
Mark Rawstron
As someone who has a very seasonal business, paying as we earn in a monthly or bimonthly fashion for both provisional tax and GST would be much easier to handle. Our busy season is December to March (Summer), and the rest of the year is very patchy. Maybe having flexible provisional tax and GST terms (ie not having to pay much in winter when we earn next to nothing), and paying more in summer, would be REALLY helpful.

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1 year ago
Mark Rawstron
If GST and Tax could be PAYE and bimonthly but alternating each other - i.e one month tax, the next month GST, the next monthy tax and so one. Pay as you earn is a BIGGIE for us because out business is seasonal and cashflow fluctuates wildly between summer and winter - IT MUST BE on what we CAN do at the time. In Summer we will be able to pay more and in the winter much less.

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1 year ago
Heather King
Provisional tax should be aligned with GST payments, as with the GST ratio system, to more accurately reflect the performance of a business. This ratio approach should be adopted generally so that everyone pays their prov tax at the same time as GST based on what they have actually earned. Paying prov tax as you go, rather than at several rather odd and illogical times of the year, will assist cash flow and help people to budget more carefully.

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1 year ago
Steve johnston
being self employed my income from month to month can be steady or a bit like a roller coaster. This depends on the workload that is often created by outside forces from the weather to the economy. I've had a period of 4 months of very little work over a 4 month period a few years ago the created a financial strain. Paying provisional tax which is worked out by a formula bi-monthly (with GST) is a much fairer way to pay. This is by no means an exact science as small businesses running from home can claim part of their house expenses towards the businesses. This will, however, come out in the wash (so to speak) with the end of tax year's accounts with my accountant. I'm in favour then of a sliding provisional tax relating to each GST period as a fairer and more easier managed system. Regards Steve Johnston

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1 year ago
Rohan Hooker
to keep it simple, paying gst is stating that your co has earned profit. you could easily pay a % based on those figures. with a tidy up at the end of the financial cycle. pretty much along the same lines as with holding tax on labour only contractors. the % can be an agreed figure based on previous years, or for a newby based on the profit he has just earned. for small to medium co this could work well but unsure how it would affect bigger co's

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1 year ago
Graeme 53
I support the idea of "pay as you go" on provisional tax i.e. in October/November, identify actual income in the first half of the year and pay provisional tax on that - and then do the same in April/May. My income varies from year to year so estimating it in advance is problematic. But, at the end of the 6 month period I know (more or less) my actual earnings for the period, so can more accurately assess what I need to pay. IRD would get more provisional tax from me earlier under this approach because I almost always earn more in the first six months than the second six months (because of holidays over summer). This approach would also be fairer for small businesses that earn much more in the second half of the year than the first e.g. retailers

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1 year ago
Tom Hunter
I agree with this. I run a fairly smart s/s rather than an accounting IT package and have only once been stung badly by Provisional tax. But as others have said, predicting this stuff a year out is impossible in a business. In two cases - 2011 and this year - I've had to specifically tell the accountant to not pull the old "Total Tax + 5%" stunt but to take my prediction for the expected annual income and pay tax based on that. A good thing too, otherwise I would have been staring down the barrel of big tax payments, followed by big tax refunds a year later. Just a pointless wash of money. I see others have talked about a two month period but six months would fit with GST and, at least for diary farmers, the Oct/Nov and April/May split, would work well, as at each stage you'll have a good handle on the next half-year of income, even with "shocks" like the current dairy payout disaster.

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1 year ago
Tom Britton
I'm retired and have untaxed income from an overseas pension and occasional self-employed work (not a business). I tried to avoid the provisional tax regime by prepaying tax on that income in my first year of retirement, but the payment wasn't applied in the tax calculation process until after the provisional tax threshold requirement was assessed. My voluntary tax payment should have been treated in a similar way as PAYE tax. The provisional tax requirement should be determined on the net tax to pay after ALL prepaid tax payments (including voluntary tax payments) have been taken into account, including all payments made prior to the user's return filing date. If you think that would open too many loopholes, perhaps include all payments made prior to the end of the tax year or some other appropriate date (May 7?, July 7?).

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1 year ago
Patricia Paxton
I fully support a review of the provisional tax laws in a way that enables individuals to pay as they earn, rather than to have to predict earnings, which is sometimes quite fraught! I also support any moves for an automatic adjustments at year end - to repay over-payments and to claim under-payments.

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1 year ago
Neil
Given modern accounting systems, there is no reason why provisional tax can't be paid in the same manner as PAYE on a regular basis. Businesses should understand at the minimum each quarter how their business is tracking and make any adjustment. They don't even need an accountant to tell them this. It should be part of their business cash flow management.

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1 year ago
Geoff Pritchard
Provisional tax is complicated, problematic, frequently unfair, and (worst of all) completely unnecessary. It should not be "improved" in any way; it should be abolished entirely. A much simpler and fairer replacement for provisional tax would be a system of use-of-money interest. Allow businesses to make tax payments for the current year at any time they see fit, in any amounts they see fit. Then, at the end of the year when everything is known, the IRD could charge or pay a reasonable rate of interest on under- or over-payments. There would be no late penalties. Businesses would still have to guess at their tax liability in advance, but when they got it wrong (as they frequently would - not much anyone can do about that) they would not be hit with draconian retrospective penalty payments as they are now. They would simply pay a reasonable rate of interest for the use the government's money. Or, if it turned out they'd paid too much or too soon, they would receive a reasonable rate of interest on what would effectively be short-term borrowing by the government. No dramas, no nasty surprises, no arbitrary demands for provisional tax payments to be made on particular dates. Just the normal process of managing cashflow - something every business does anyway.

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1 year ago
Jill Corbett
Our income varies enormously from month to month and year to year as we build, develop and sell residential houses. We would much prefer the "PAYE for businesses" approach, so that when we have the money in hand from a sale we pay the PAYE, much as we do for the GST. We can never possibly anticipate what we will earn for the following year - impossible for us to know that. Thanks, Jill Corbett (Director)

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1 year ago
Paul Howes
I note that some taxpayers have suggested payment of provisional tax on a monthly basis. However a lot of businesses do not calculate their net earnings on a monthly basis. To expect them to do so is not reasonable. Most would know their cash position but that is a different matter. The present system works well. it should be remembered that people do not go into business to serve the government

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1 year ago
Bronwyn
pay as you go is a good idea. No end of the year tax bills

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1 year ago
Phil Journeaux
The main issues I have with provisional tax are: 1. The difficulty in estimating what total income will be for the coming year. My income fluctuates between years, ad while I could estimate it with the best of intentions, the risk of being penalised via the cost of funds penalty means the easiest approach is simply to stay with the 105% of the previous year, & accept a refund or terminal payment in the following year. One approach to ease this could be to allow an updated estimate on (say) a 2 monthly basis - at the same time as the GST return. 2. Income tends to fluctuate within a year - often cashflow is slowest at the start & then builds later in the year. It would be helpful if we could tailor tax payments relative to cash flow.

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1 year ago
Lesley Ogden
While I can see it may be beneficial for some businesses to pay monthly provisional tax it may not work for others. When in business a few years ago, it probably would have helped us a lot, but in my situation now as a contractor, it would be a right pain to do this every month. Provisional tax was paid only once a year back then for us, so it was a big surprise to me when I received my tax papers from the accountant recently to find I now have to pay provisional tax 3 times a year. Not every scenario fits into the same box so there must be options surely. Some people would find it beneficial to pay monthly and they should be allowed to do so, but also have choices for others (like with GST). As it is I find it ridiculous to have to pay provisional tax at all quite frankly on what I am earning. There should be an income limit for the necessity to pay provisional tax; $30,000 pa income for example.

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1 year ago
Denny Boothe
as a very recent retiree with one rental property forming part of my retirement income, I find the provisional tax a very unfair burden as it is calculating tax on my last years income income . It is demanding (over) payment in advance - payment which is more than my tax which is actually due (because my income has gone down this tax year). Provisional tax should be scrapped and replaced by simply paying tax on current income.

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1 year ago
Arthur
My income is not business generated but is overseas earnings that are liable for NZ tax. I will probably need to meet my commitment by paying provisional tax. The income is uniformly earned throughout the year, so anything that makes tax liability and tax payment more in line with PAYE would be welcome.

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1 year ago
ron
When I was self-employed, my income was wildly variable, both from year to year, and from month to month - depending on my monthly sales (I billed monthly). A good year could be three times a bad one. Many months I billed nothing, some months tens of thousands. Provisional tax based on a previous good year was often a dreadful burden in a bad year, and I couldn't estimate the current year with any accuracy either, so didn't dare try that. Paying tax much like a PAYE earner, based on my actual monthly billings, would have got my tax pretty close to right in both timing and amount (issues with the steps in the marginal tax-rate excepted). I can't think of any other way that would do this, so I'd support paying my tax monthly, based on my actual billings (Also, since I only paid GST 6-monthly, that would be a good time for someone to check that the total of the 6 monthly amounts matched the 6-monthly GST amount). While technology may make current-year data more available, this is more a legislative issue than a tech issue, and could be implemented tomorrow if the law were changed. (IRD has many ways for a taxpayer to make payments, so that part is easy. The 6-month reconciliation would also be trivial, since it's just cross-matching two existing data flows.

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1 year ago
Michelle Klaessens Rawstron
If the Banks and IRD could work together they could implement a integrated cloud tagging system - where when money comes into or out of your account you could flag it (for example with a tick box) as income, gst expense, non gst expense, paying an employee, drawings or asset purchase and this could be used as an estimate for GST and Provisional Tax that could be added up and sent as a form and associated payment at the end of each month. Bi monthly or every 6 months when you do your returns this could be adjusted according to your proper calculations... but it should be pretty close to correct in a Pay as You Earn Fashion. It would be even cooler if it could be linked via API to online accounting programs such as quickbooks online or Xero in 'Zapier' or 'itduzzit' integrator fashion.

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1 year ago
Debbie McDonald
For me personally I have struggled to pay provisional tax. This is my first year. The reason why I am in this predicament is that I owned my home, then met my partner, with whom we brought a house together. I then decided to rent my other home. The income off this was t supplement our mortgage and expenses in the new home, however it feels like I am being heavily penalised, as we do not receive any Family Tax Credits and at the moment I do not receive any assistance from my children's (I have two) father, as he has been diagnosed with bladder cancer and hasn't been able to work, thus has not been able to contribute in any way to the expenses associated with our children. Its not like we are making a huge wealth. I am now faced with either selling my other home to try and make ends meet. I am not sure whether this is the way its is supposed to be.

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1 year ago
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