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Income Tax Act 2007

General collection rules - Provisional tax - Table R1: Summary of instalment dates and calculation methods for provisional tax

RC 11: Calculating amount of instalment using GST ratio

You could also call this:

“How to work out your provisional tax using your GST ratio”

When you use a GST ratio to calculate your provisional tax, you need to use a special formula. The formula is: GST ratio for the tax year multiplied by your total taxable supplies.

Your total taxable supplies are the amount of money you’ve made from selling goods or services that are subject to GST. This amount covers the same time period as your instalment period.

If you pay GST every month, you need to add up your taxable supplies for two months. This is because the instalment period for provisional tax is usually two months long.

There are some special rules that might change how this calculation works. These rules are found in Section RZ 4 and Section RZ 5D of the Income Tax Act. These sections talk about different time periods and rules for Maori authorities.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519833.

Topics:

Money and consumer rights > Taxes

RC 10B: Calculating amount of instalment for periods using AIM method, or

“How to work out your provisional tax payments using AIM”

RC 12: Voluntary payments, or

“Optional extra payments towards your income tax”

Part R General collection rules
Provisional tax: Table R1: Summary of instalment dates and calculation methods for provisional tax

RC 11Calculating amount of instalment using GST ratio

For a person who uses a GST ratio, the amount of provisional tax payable on an instalment date for a tax year is calculated using the formula—
$GST ratio for tax year × total taxable supplies.$

Where:
In the formula, total taxable supplies is the amount of the person’s total taxable supplies in the taxable period that matches the instalment period.
For the purposes of subsection (1), a person who pays GST on a 1-month cycle under section 15 of the Goods and Services Tax Act 1985 must apply the GST ratio to the sum of their taxable supplies in the current taxable period and the preceding taxable period, that is, the taxable supplies in the 2-month period matching the instalment period.
Sections RZ 4 (GST ratio method: 2010–11 to 2013–14 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities) modify this section.

Compare

2004 No 35 s MB 10

Notes

Section RC 11(4): amended (with effect on 1 October 2010), on 21 December 2010, by section 124 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section RC 11(4): amended, on 1 October 2010, by section 28 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RC 11(4): amended, on 1 October 2008, by section 42 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).