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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 21: Paying provisional tax in transitional years

You could also call this:

“How to pay provisional tax during a change in your business's financial year”

If you need to pay provisional tax in a transitional year, you must pay all the instalments for that year. This includes both interim instalments and a final instalment.

You pay the interim instalments on specific dates. Usually, this is the 28th day of the months listed in schedule 3, part B. But there are two exceptions: if December is the month listed, you pay on 15 January in a transitional year. If April is the month listed, you pay on 7 May in a transitional year.

For the final instalment, you pay on the 28th day of the month after the last month in your transitional year. However, if November is the last month, you pay on 15 January. If March is the last month, you pay on 7 May.

There are some situations where you don’t have to pay on certain instalment dates. These depend on which sections of the tax law would have applied if it wasn’t a transitional year.

The law also explains how to count the months in a transitional year. The first month is the first whole month in the transitional year. The last month is when your new balance date happens. You must count all the months in between.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519862.

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RC 20: Calculating residual income tax in transitional years, or

“How to adjust residual income tax for transitional years”

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RC 22: Calculating instalments in transitional years: standard method, or

“How to calculate tax instalments when your tax year changes”

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

RC 21Paying provisional tax in transitional years

  1. A person liable to pay provisional tax in a transitional year must pay the sum of all instalments of provisional tax payable for the transitional year, both interim instalments under subsection (2) and a final instalment under subsection (3).

  2. The person must pay an instalment other than a final instalment on—

  3. the 28th day of the months set out in schedule 3, part B (Payment of provisional tax and terminal tax) unless paragraph (b) or (c) applies:
    1. 15 January, when the month set out in schedule 3, part B is December and the year is a transitional year:
      1. 7 May, when the month set out in schedule 3, part B is April and the year is a transitional year.

        1. The person must pay the final instalment on—

        2. the 28th day of the month following the final month in the transitional year; or
          1. the 15th day of January, when November is the final month; or
            1. 7 May, when March is the final month and the year is a transitional year.

              1. For the purposes of subsection (2), provisional tax is not payable on—

              2. the date of instalment B, if section RC 13 would have applied if the year were not a transitional year; or
                1. the dates of instalments B and D, if section RC 14(1)(a) and (b) would have applied if the year were not a transitional year; or
                  1. the dates of instalments B, D, and F, if the person liable to pay provisional tax is a person with an initial provisional tax liability whose first business day occurs within 30 days of the date of instalment F; or
                    1. the date of instalment C, if section RC 14(1)(c) would have applied if the year were not a transitional year; or
                      1. the dates of instalments C and F, if the person liable to pay provisional tax is a person with an initial provisional tax liability who pays GST on a 6-monthly basis whose first business day occurs after the day that is 30 days before the date of instalment F.

                        1. In this section, and in sections RC 22 to RC 25, and in schedule 3, part B, the number of months in a transitional year is determined as follows:

                        2. the first month in a person’s transitional year is the first whole month in the transitional year:
                          1. the final month in a person’s transitional year is the month in which their new balance date under section 39 of the Tax Administration Act 1994 occurs:
                            1. each month falling between the first and final months must be included in determining the length of the transitional year.

                              Compare
                              Notes
                              • Section RC 21(2)(a): substituted, on , by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                              • Section RC 21(2)(b): substituted, on , by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                              • Section RC 21(2)(c): added, on , by section 535(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                              • Section RC 21(3)(b): amended, on , by section 535(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                              • Section RC 21(3)(c): added, on , by section 535(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).