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RM 11: Using GST refund to pay instalment of provisional tax
or “Using your GST refund to pay some or all of your provisional tax”
You could also call this:

“How to get money back when you've paid too much provisional tax”

This part of the law talks about what happens when you need to pay less provisional tax for a tax year than you originally thought.

If the amount of provisional tax you need to pay is reduced, either by you or by the Commissioner, you can ask for a refund of the extra money you’ve already paid. The Commissioner will use this extra money to pay off any other tax or amounts you owe. If there’s still money left over, they’ll refund it to you.

If your residual income tax for the year is $5,000 or less, you can ask for a refund of provisional tax you’ve already paid, except for the final instalment. The Commissioner will use this money to pay off any other tax or amounts you owe, and refund what’s left.

When you get a refund or have extra provisional tax applied to other payments, two things happen:

  1. The next instalments you need to pay will be calculated as if you had paid less in earlier instalments.

  2. The money that was refunded or applied elsewhere won’t count as provisional tax you’ve paid for that tax year anymore.

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Next up: RM 13: Limits on refunds for ICA companies

or “Rules for tax refunds and transfers for imputation credit account companies”
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Part R General collection rules
Refunds

RM 12Reduction in provisional tax liability

  1. This section applies when the amount of provisional tax payable for a tax year is reduced by the person liable to pay the provisional tax, or by the Commissioner under section 119(2) of the Tax Administration Act 1994.

  2. If the person applies for a refund of the amount of provisional tax already paid that is as a result of the reduction more than the amount that would have been payable in relation to earlier instalment dates for the tax year, the Commissioner must—

  3. apply the overpayment as the person asks under section 173T of the Tax Administration Act 1994 or, if no request is made, in a way that the Commissioner determines in payment of tax or another amount that is payable by them; and
    1. refund any balance of the overpayment.

      1. If the person’s residual income tax for the relevant tax year is no more than $5,000, and they apply for the refund of an amount of provisional tax that has been determined under section RC 9 (Provisional tax payable in instalments) and already paid, other than on a final instalment, the Commissioner must—

      2. apply the amount as the person asks under section 173T of the Tax Administration Act 1994 or, if no request is made, in a way the Commissioner determines in payment of tax or another amount that is payable by them; and
        1. refund any balance of the amount.

          1. When an overpayment or amount of provisional tax for a tax year has been applied or refunded under subsection (2) or (3)—

          2. a later instalment payable under section RC 10 or RC 11 (which relate to the methods used to calculate the amount of an instalment), as applicable, is calculated as if the total instalments previously payable were reduced by the amount of the overpayment or amount; and
            1. the overpayment or amount applied or refunded is, from the date of action taken by the Commissioner, treated as not being provisional tax paid for the tax year.

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              Notes
              • Section RM 12(2): amended, on , by section 63(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section RM 12(3): amended, on , by section 28(1) (and see section 28(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
              • Section RM 12(3): amended, on , by section 63(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section RM 12 list of defined terms apply: inserted, on , by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section RM 12 list of defined terms ask: inserted, on , by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section RM 12 list of defined terms request: inserted, on , by section 63(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).