# Provisional Tax Instalments

Country: New Zealand
When: Three instalments for standard 31 March balance date: First instalment 28 August; Second instalment 15 January; Third instalment 7 May. Dates shift for non-standard balance dates.
Tax year: 2025

Provisional tax is the mechanism by which income tax is paid during the income year rather than as a lump sum after filing. It applies where the prior year's residual income tax (RIT) exceeded NZD 5,000. Three equal instalments are due across the year using the standard method: each equal to one-third of 105% of the prior year's RIT.

## Who this applies to

- Companies and individuals whose prior year residual income tax (RIT) exceeded NZD 5,000
- New businesses estimating their first-year income tax liability will exceed NZD 5,000
- Taxpayers using the standard method (105% of prior year RIT) or the estimation method

## What to file

Provisional tax is a payment obligation, not a separate return. Payments are made via myIR and tracked against the income year's final tax assessment.

## How to file

Pay via myIR at my.ird.govt.nz, internet banking using IRD payment codes, or via a registered tax agent. The amount is pre-calculated by IRD based on the prior year's RIT.

## Payment due

Three instalments: 28 August (first), 15 January (second), 7 May (third). Each instalment = one-third of 105% of the prior year's RIT under the standard method.

## What happens if you miss it

No separate late filing penalty for provisional tax. However, use-of-money interest (UOMI) accrues on unpaid instalments from the due date at approximately 8.35% p.a. (2025/26 rate). A late payment penalty of 1% applies on the day after the due date, plus a further 4% seven days later.

## Submission checklist

- Confirm prior year residual income tax (RIT) to determine whether provisional tax applies (threshold: NZD 5,000)
- Calculate standard instalment amount: prior year RIT x 105% / 3
- Set calendar reminders for all three due dates (28 August, 15 January, 7 May)
- Consider whether the estimation method would be more accurate if current year income differs significantly from last year
- Check safe harbour eligibility: if prior year RIT was under NZD 60,000, paying standard instalments on time avoids UOMI even if the final liability is higher

## Documents you need

- Prior year IR4 or IR3 showing residual income tax (RIT)
- myIR account access to confirm pre-calculated instalment amounts and payment references

## Common mistakes to avoid

- Missing the first instalment on 28 August: this is the most commonly missed date as it falls in the middle of the tax year
- Underestimating using the estimation method and incurring UOMI on the shortfall
- Not checking whether the safe harbour threshold (prior year RIT under NZD 60,000) applies, and needlessly switching to the estimation method

Source: https://www.ird.govt.nz/income-tax/provisional-tax