Please read this article along with the news update below from 13 June 2023
There appears to be some confusion about the qualifying criteria.
Customers who expect to have Residual Income Tax (RIT) less than what was assessed using the standard option can vary their final instalment payment, under section 120 KBB of the Tax Administration Act 1994, as long as their RIT is $60,000 or above.
If you have clients choosing to pay a lower amount, under section 120 KBB, any requests to update their account to reflect this should be supported by total provisional tax payments at or above $60,000.
Customers who have RIT of less than $60,000 will still be eligible for the safe harbour provisions under section 120KE. This provision does not allow for varying the final instalment payment, however it will stop UOMI until the customer’s terminal tax date. Late payment penalties may still apply. In these circumstances, we’ll still ask for payment. Any credits available may be offset against the final provisional tax instalment.
Information about changes to section 120 KBB is in the Tax Information Bulletin, Volume 32, Number 4, May 2020 (starting on page 53).
Previous article from 13 June
Provisional tax customers using the standard option no longer need to change to the estimation option to pay a lower amount at their final instalment date if:
- they expect to have Residual Income Tax (RIT) less than what was assessed using the standard option
- their RIT will be more than $60,000
- they have paid all previous provisional tax instalments for the year.
If you have clients with an expected RIT less than what was assessed for the year and choose to pay a lower amount, please send us a message in myIR so we can update their account. This will stop the sending of letters requesting repayment as well as credits being transferred to the final provisional tax instalment.
Information about this change is in the Tax Information Bulletin, Volume 32, Number 4, May 2020 (starting on page 53).