WHAT IS TERMINAL TAX?
Terminal tax is the tax that is determined when your books are done at the end of the financial year. Terminal tax is the difference between what you have paid in provisional tax (if any) over the previous year and what it turns out you actually owe. Of course if you have paid too little provisional tax then you must pay terminal tax and if you have paid too much you get a refund.
Terminal tax is due on either 7th February if you do not have an accountant or tax agent OR 7th April if you have an accountant or tax agent who has an extension of time on your behalf.
WHAT IS PROVISIONAL TAX?
Provisional tax is the self-employed version of P.A.Y.E - a pay as you earn tax. You don’t have to start paying provisional tax until the year that your terminal tax exceeds $2,500. If you want to, you can make voluntary payments to the IRD because they offer a discount in tax if you do.
Provisional tax payments are due in three instalments on 7th July, 7th November and 7th March in every year.
You make provisional payments for the year you are working in. Your provisional payments are calculated like this – previous year’s terminal tax plus 5%; but until your previous year’s tax return is filed it is based on the previous year’s payment plus 10%. From this you can see it is good to be on top of things by getting your books done and tax return filed early so that your payment situation is based on up-to-date information.
CAN YOU PROVIDE HELP WITH GST AND PAYE FILING?
Absolutely, we are able to help you with your accounting requirements from our basic service – Online Accounting Office (click here for more information) which includes an annual meeting – right through to solving problems (click here for a list of our services).