What is provisional tax?

Provisional tax is tax paid on your business income that is spread throughout the year to avoid a large tax bill at the end of the year. Every taxpayer who is liable to make a payment of $5000 or more for a year will be a provisional taxpayer in the following year.

Provisional tax is usually paid on the following types of income:

• Self-employed/rental income
• Income from a partnership or look through company
• Overseas Income
• Income from estate/trust
• Schedular payments with a low PAYE rate

Individuals paying provisional tax under the standard option no longer need to switch to the estimation option to pay a lower amount at their final instalment date if:

• RIT is expected to be less than what was previously assessed under the standard option
• RIT will be more than $60,000
• All past provisional tax instalments for the year have been paid

For more specific advice regarding your provisional payments, get in touch below.