You may have seen the recent IRD advertising campaign about changes to provisional tax. We think the ads are misleading.
There are no changes to who is required to pay provisional tax, a tax payer will still be required to pay provisional tax if your tax at the end of the previous year was more than $2,500.
The changes are simply an introduction of a new method of how and when to pay. The new method is called the Accounting Income Method (AIM) and will be available for tax payers using Xero, MYOB or other approved accounting software.
The new rules will require taxpayers using AIM to make tax payments more often, in line with GST filing dates. A Financial Statement of Activity will be required to be filed from the software with IRD on or before the AIM instalment date. As always there are eligibility criteria to be met and exclusions that apply.
The new method will be available from the 2018-19 income year. We will provide more information closer to that time.