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.
Contact Tax Accountant
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