TAX TIDBITS
Issue Twenty-Nine, November 2008
In this months issue:
Provisional Tax Due Dates & Penalties
Due Dates for Payment
Monthly and two-monthly GST taxpayers are required to make three compulsory provisional tax payments on their GST due dates. These dates fall on the 5th, 9th and 13th month of their income year. For example, a taxpayer with a March balance date will pay GST and provisional tax on the 28th August, 15th January and 7th May. Voluntary payments can also be made at any time.
Please note the next instalment for both Provisional Tax and GST on the same date is 15 January 2009. If your business historically shuts down during the Christmas period you may need to make arrangements for organising the preparation of your returns and payments prior to the Christmas shutdown. HWI offices will be open from the 12 January 2009 and we are here to help if required.
Six-monthly GST taxpayers will make two compulsory provisional tax payments aligned to their two GST payment dates. These dates fall on the 7th and 13th month of their income year. For example, a taxpayer with a March balance date will pay GST and provisional tax on the 28th October and 7th May. Voluntary payments may also be made at any time. GST-registered taxpayers who account for GST and provisional tax on a six-monthly basis who cease to be registered for GST will revert back to paying provisional tax three times a year, with effect from the date they ceased to be GST registered.
Taxpayers who adopt the “ratio method” will pay their provisional tax every two months, together with their GST. For example, a taxpayer with a March balance date will pay GST and provisional tax on the 28th June, August, October, February and also 15th January and 7th May. This method can only be used by those taxpayers who pay GST on either a monthly or two-monthly basis, but even though GST may be paid each month, provisional tax is payable two-monthly.
Provisional taxpayers who are not GST registered will make three compulsory provisional tax payments on the 5th, 9th and 13th month of their income year, which will be 28th August, 15th January and 7th May for taxpayers with a March balance date. They will also be able to make voluntary payments at any time.
Penalties
As is currently the case, all compulsory provisional tax payments will be subject to standard penalties for short or non-payment. Voluntary overpayments are not subject to penalties.
New Taxpayers
Taxpayers who start up a business part-way through a year will be required to make three provisional tax payments if they start more than 30 days before the first instalment date, two provisional tax payments if they start at a later date and more than 30 days before the second instalment date, and one instalment if they start at a later date and more than 30 days before the third instalment date. Otherwise, they do not have to make any payments of provisional tax for that year.
Provisional Tax Letters
HWI tax administration team will mail to their clients the appropriate tax letters for each provisional taxpayer within three weeks of the due dates. The 15th January tax letter will be mailed mid December to allow clients sufficient time to organise payments. Should you wish to discuss your letter or arrange for an estimate or voluntary payments please contact one of the HWI directors or managers. Taxpayers with a non standard balance date will also receive the appropriate letter within three weeks of the due date for payment.
Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
