Back to Making Tax Simpler
Calculating tax adjustments

Can you do tax adjustments throughout the year?

Traditionally many tax adjustments are only identified and calculated at year end. However, most of the information required is available when it is entered into software and doesn’t need to wait until year end.  Therefore many tax adjustments could be entered during the year rather at year end.

How will the expectation of considering your tax adjustments during the year work for you?   

Comments

Andrew Wilson
It depends on the time frame for filing. The challenge is how to make this work for a seasonal business - already extremely busy. Realistic time frame for completing accounting transactions - eg two months could make it workable - but it will be different depending on the business.

Do you agree with this comment?

  • agree3
  • disagree1
2 months ago
Julian Inch
Yes it will work for me. Doing things during the year and avoiding the year end business and stress is excellent.

Do you agree with this comment?

  • agree8
  • disagree3
2 months ago
Michele Clemens
Yes works well for me because our bookkeeping is done on a daily basis, via online software like Xero. We like to see our results in real time so we can react proactively as a business to changing business conditions in a timely manner. End of the year is too late to pick up if things are going wrong.

Do you agree with this comment?

  • agree5
  • disagree1
2 months ago
Julia Palmer
I think its a great idea, and yes I think it would just link into say the same timeframes and process as GST filing -

Do you agree with this comment?

  • agree3
  • disagree2
2 months ago
Paul Aveyard
Provisional tax is reverse engineered at the end of the year. If the payments amount to more than the tax that was paid, there is interest added. This assumption of lump sum value is wrong. I receive income monthly and will need to pay this monthly. I had a refund for paying too much tax but received an interest fee. How is that possible and being fair. How can you safely assume that I was in possession of the income at the first payment by calculating at the end of the year when the spike in exchange rate (income increased) is in January (the end of the year).

Do you agree with this comment?

  • agree5
  • disagree1
2 months ago
Michelle Costello
Yes, sounds much better than paying more provisional than we need. Would work in my business.

Do you agree with this comment?

  • agree4
  • disagree2
2 months ago
Charles Brink
Making tax adjustments during the year is the best way to proceed, and our system handles it more than adequately

Do you agree with this comment?

  • agree2
  • disagree2
2 months ago
Leonie
This would work for my business easily, it would be ideal to tie in with the GST payments as I am checking my bookwork prior to that any way. I would like to have GST dates standardised right throughout the year.

Do you agree with this comment?

  • agree3
  • disagree2
2 months ago
Michael Leo Karl
Good idea as things change during the year and it would help budget

Do you agree with this comment?

  • agree1
  • disagree2
2 months ago
Paul Hickson
Far rather do it once a year because I have income from a number of other entities that affect the final outcome. Existing system is OK and I know that I can always estimate or pay tax voluntarily in monthly instalments if I want, with an annual square up. Too time consuming to do this when I prepare my GST returns. Seems an OK proposal for simpler business of scale with in house accounting.

Do you agree with this comment?

  • agree7
  • disagree0
2 months ago
Phil Besant
I have a very small rental property business with farly static income and expenses. It would simply take me much more time to calculate my Provisional Tax on an as you go basis. As it is I calculate my income status every six months to prepare my 6 monthly gst returns and already pay my provisional tax at the same time. This suits me best.

Do you agree with this comment?

  • agree4
  • disagree1
2 months ago
Suzie muirhead
Agree, same issue here

Do you agree with this comment?

  • agree2
  • disagree1
2 months ago
mike brearton
flexibility is key. being able to make adjustments are you learn about them: fabulous. getting penalised because you missed one of the much more frequent deadlines: less fabulous.

Do you agree with this comment?

  • agree4
  • disagree1
2 months ago
Phil McArthur
I have been wanting these changes for a long time. My business accounts are very simple and any adjustments can easily be made during the year. I would much rather pay more often based on accounting software. Just do it!

Do you agree with this comment?

  • agree3
  • disagree2
2 months ago
Amanda Plimmer
Would like change to view of infromation in myIR Secure Online Services "Look at account information" Income tax account detail Would prefer the debit column and credit column to have a total the current view compares the difference between the assessed amount and payment

Do you agree with this comment?

  • agree1
  • disagree1
2 months ago
Sherayl McNabb
Our figures are minimal and end of year works better for us. This will create more work and time for self employed is not as easy to rely on. It may work for some and not others.

Do you agree with this comment?

  • agree5
  • disagree1
2 months ago
Neil McCullum
Fine for our business With a wash up at the end of the Year after the accountant has checked the books

Do you agree with this comment?

  • agree2
  • disagree2
2 months ago
Rach
It will be easier for us to do tax adjustments at fin year end. To do otherwise would likely result in duplication of work and higher accountant costs.

Do you agree with this comment?

  • agree7
  • disagree1
2 months ago
Tracy Gibbs
I'm not sure if this will benefit us or not - being a farming business the majority of our income is paid in a six month period, with little or no income in the other six months - our income is not spread out throughout the year. I presume that we would be hit with high tax bills to pay over the period of income, but what happens for the period that we don't earn anything but still have expenses going out? With the current system - even though it's by no means perfect! - with our type of business the tax payments are calculated over the total year's income and expenses which evens things out for us.

Do you agree with this comment?

  • agree4
  • disagree1
2 months ago
Fiona Boyle
Yes that would wok for our business which is small and we are constantly in and out of overdraft so instead of a huge sum 3 times a year regular would be great

Do you agree with this comment?

  • agree2
  • disagree1
2 months ago
Megan Lloyd-Evans
Our accounting software and accountant take care of our tax payments quite well. It's a lot less work at the end of the year than it used to be. Doing our tax more often would be more work for us than it is now, which is always distracting. We don't have any staff so don't do employee PAYE or KiwiSaver, but we do pay GST every six months. It would be good if the tax system was more flexible to make it easier to have seasonal fluctuations and good/bad years. I'm not sure if paying as you go is the way to do this. The current finger in the air system doesn't work for us as our income is very up and down.

Do you agree with this comment?

  • agree2
  • disagree2
2 months ago
Paul
I hope any new system is voluntary. I can see how some don't like doing their tax once a year but I prefer it. As a small business we don't have the admin resources to spend any more more time on it than we do.

Do you agree with this comment?

  • agree4
  • disagree1
2 months ago
j spruell
Some OK. Some near impossible - for instance investment income under the accrual rules is difficult and securities subject to FDR appear unclear.

Do you agree with this comment?

  • agree1
  • disagree1
2 months ago
Philip Patston
Yes, I'd much rather make adjustments throughout the year than at year's end. My income varies year to year so I often end up paying large amounts of provisional tax during lean years.

Do you agree with this comment?

  • agree3
  • disagree1
2 months ago
Neil Miranda
I believe that this is the most correct and efficient way of calculating provisional tax

Do you agree with this comment?

  • agree2
  • disagree2
2 months ago
Philip Wyatt
The main issue I have is the deductions for depreciation on capital equipment and other wash up items that are only calculated at years end. If we paid the tax based on the profit nominated in our accounts each 2 months with the GST payment or monthly with the Employer deductions we would still end up with an over payment by years end. This removes some of the cash we would need for further running our business without resorting to bank loans to cover monthly running costs. Capital items are purchased during the year so depreciation cannot be calculated as an average during the year.

Do you agree with this comment?

  • agree5
  • disagree1
2 months ago
Murray Willis
It would be hard to use for livestock farmers as a major tax adjustment is for livestock valuation which can't be determined until the IRD releases the national values each year.

Do you agree with this comment?

  • agree5
  • disagree1
2 months ago
Margaret Baker
Tax adjustments for example by monthly in line with GST returns would result in alot of extra work for small companies. Mid size companies implement management reporting and so monthly adjustments in the main are done. Perhaps their would be a way to automate the monthly adjustment in the software that could then be finally adjusted end of year by an advisor.

Do you agree with this comment?

  • agree1
  • disagree1
2 months ago
Simon Telfer
Great idea... All in favour and no issues with maintaining accurate records throughout the year.

Do you agree with this comment?

  • agree1
  • disagree2
2 months ago
Rodger Welsh
We complete a six monthly GST with an annual account. We pay Taxes on Invoicing, this means careful timing of invoicing i.e., no invoicing within 12 weeks of each return. Clients can take up to 12 weeks to pay! Other wise we would be happy for a 6 monthly adjustment.

Do you agree with this comment?

  • agree2
  • disagree1
2 months ago
Michael Wood
It would add somewhat to my accounting workload to calculate annual leave accruals, ACC Levy accruals, term deposit interest accruals, etc multiple times per year, which would be necessary to correctly calculate withholding tax on a continuous basis. Otherwise it would just be an estimate, which is what it is at the moment under the current system.

Do you agree with this comment?

  • agree2
  • disagree0
2 months ago
Ross Williamson
This method will be far better than provisional, as my earning fluctuate so much from year to year, hope it is based on my two month GST figures, although some of my earnings are zero rated of GST, overseas commissions.

Do you agree with this comment?

  • agree2
  • disagree1
2 months ago
Raewyn
More filing and more time wastage. It takes us very little time to complete at the end of tax year, it's simple, basic and we don't need to complete more regularly.

Do you agree with this comment?

  • agree2
  • disagree1
2 months ago
Paul Clymer
This all just mean more work for me

Do you agree with this comment?

  • agree3
  • disagree1
2 months ago
Vanessa
I think this is a really good idea.

Do you agree with this comment?

  • agree1
  • disagree3
2 months ago
Susan Stevens
That would be great, it definitely takes the guessing game out of running a small business. Huge thumbs up from me.

Do you agree with this comment?

  • agree2
  • disagree2
2 months ago
Shaneo
Would work OK for me as long as I had sufficient time to prepare accounts. A lot of bills come in late, others need adusting before payment. With a lean first half of the year it's not nice having to shall out more money than I have earned on provisional tax.

Do you agree with this comment?

  • agree1
  • disagree1
2 months ago
Serena Scotcher
No we can't, some information is simply not known until year end.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Simon Monks
I use xero to keep a near-real time view of the business, so tax adjustments are not usually a problem.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Rick
No - my accounting software is just an excel spreadsheet and revising this to make tax adjustments through the year is not going to happen.

Do you agree with this comment?

  • agree3
  • disagree0
1 month ago
Simon Griffiths
No this does not work for us. We don't use accounting software as there is no need for it and it is just another expense. Just a spread sheet and a normal online bank account. We basically get paid quarterly and so working out our expenses - bad debt etc. won't work on a monthly basis. Working out at the end of the Tax year is fine with us even if we end up paying too much provisional tax which is often the case.

Do you agree with this comment?

  • agree3
  • disagree1
1 month ago
Chris Wardle
PAYE on accounting income - paid at GST interval ... yes I think so. It will wash up at year end with minor adjustments from final accounts. Can't see it being a bad idea ...

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Steve Bull
Brilliant. We already do monthly WIP calcs/entries and provision monthly for depreciation and some chunky expenses such as annual insurance premiums so calculating prov tax should be quite simple. Look forward to it but unfortunately suspect we will be over the turnover threshold. Would be good to see this higher.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Bryan Gibbs (San-Bry Home & Garden)
I think this is a brilliant idea and personally I would be quite comfortable for my accountant to do the calculations monthly, twice annually or what ever is required. This would take the pressure off me such as it is annually at the moment.

Do you agree with this comment?

  • agree1
  • disagree3
1 month ago
Margaret
Don't you think your accountant will bill you more if he has to prepare returns more often?

Do you agree with this comment?

  • agree2
  • disagree1
1 month ago
Victoria Church
This method will better suit our business. The current software will account for the required entries and the change in regulation will assist with Cashflow Management in an industry where there are peaks and troughs.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Shona Shaw
we do not want to do tax adjustments during the year. we would choose to stay with the current way of paying prov. tax.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
KirstenS
I think that it will be easier to budget for the tax payments if it is more regular during the year.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Leone Jeune
We would prefer tax adjustments once a year, it is too time consuming to complete these with our monthly GST filing. I don't like the current provisional tax regime, if our estimate is incorrect we are penalised with Use of Money interest and have to look at Tax Pooling options to reduce our exposure. I would prefer to pay provisional tax monthly when we file our GST return, then the tax will be based on actual results.

Do you agree with this comment?

  • agree1
  • disagree1
1 month ago
Naomi Sinclair
We can adjust accordingly if we need to - Doing taxes throughout the year would be way easier than trying to do big lump sum payments .

Do you agree with this comment?

  • agree1
  • disagree0
1 month ago
Scroll To Top