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Income Tax Act 2007

General collection rules - Provisional tax

RC 3: Who is required to pay provisional tax?

You could also call this:

“People who owe more than $5,000 in tax must pay provisional tax, with some exceptions”

You have to pay provisional tax for a tax year if your residual income tax for that year is more than $5,000. You can also choose to pay provisional tax if you want to, even if you don’t have to.

Some people don’t have to pay provisional tax, even if their residual income tax is more than $5,000. These people are:

  • Companies that don’t have a fixed place of business in New Zealand and aren’t treated as living here
  • Non-resident contractors who haven’t been given special permission by the Commissioner for that tax year
  • A specific type of investment entity (called a multi-rate PIE) that doesn’t choose to use the provisional tax calculation option in section HM 44

You don’t have to pay provisional tax for a tax year if your residual income tax for the year before was $5,000 or less.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519805.

Topics:
Money and consumer rights > Taxes
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RC 2: Provisional tax rules and their application, or

“How to pay tax in advance and when these rules apply to you”

Next

RC 4: Choosing to pay provisional tax, or

“How to opt into paying provisional tax when filing your first tax return”

Part R General collection rules
Provisional tax

RC 3Who is required to pay provisional tax?

  1. A person who is liable to pay provisional tax for a tax year is—

  2. a person whose residual income tax for the tax year is more than $5,000; or
    1. a person who chooses under section RC 4 to pay provisional tax.

      1. Despite subsection (1), the following persons do not pay provisional tax:

      2. a company that does not have a fixed establishment in New Zealand and is not treated as resident in New Zealand:
          1. a non-resident contractor who has not been given an exemption by the Commissioner for the tax year:
            1. a multi-rate PIE that does not choose to calculate and pay tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option).

              1. A person has no obligation to pay provisional tax for a tax year if their residual income tax for the preceding tax year is $5,000 or less.

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              Notes
              • Section RC 3(1)(a): amended, on , by section 21(1) (and see section 21(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
              • Section RC 3(2)(b): repealed, on , by section 247 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section RC 3(2)(c): amended, on , by section 183(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RC 3(2)(d): substituted, on (applying for the 2010–11 and later income years), by section 498(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section RC 3(3): amended, on , by section 21(2) (and see section 21(3) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
              • Section RC 3 list of defined terms exemption certificate: repealed, on , by section 183(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section RC 3 list of defined terms multi-rate PIE: inserted, on , by section 498(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section RC 3 list of defined terms portfolio tax rate entity: repealed, on , by section 498(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).