NZ provisional tax explained: the $5,000 RIT threshold, standard, estimation, ratio and AIM options, due dates, use-of-money interest and tax pooling.
By the Find an Accountant NZ team · Facts checked against the sources listed below on 18 October 2026.
Many people in their second year of self-employment or renting get a shock. They are asked to pay last year's tax and the first instalment of this year's tax at around the same time. That is provisional tax. It is not an extra tax. It is a way of paying your income tax during the year rather than in one lump sum afterwards, according to IRD. This guide explains who has to pay it, the four ways to work it out, the due dates, and how interest is charged.
You become a provisional taxpayer if your residual income tax (RIT) in your last return was more than $5,000. business.govt.nz describes RIT as your end-of-year tax to pay. You then pay provisional tax in the following year. IRD says provisional taxpayers commonly have:
It can also catch salary earners who receive a lump sum with too little tax deducted, or who make a bright-line property sale. If you expect more than $5,000 of RIT but are not yet required to pay, you can choose to become a provisional taxpayer.
If you use the standard, estimation or ratio option, you do not pay provisional tax in your first year in business. Your first year is still taxed, though. That tax is usually due on 7 February the following year, or 7 April if you have a tax agent, according to IRD's first-year guidance. If that bill is over $5,000, provisional tax for year two starts at about the same time, so the two bills overlap.
To soften this, you can make voluntary payments during your first year. If you qualify, you may get an early payment discount. IRD sets the rate for the 2027 income year at 4.25%.
The ratio and AIM options tie provisional tax to your GST cycle. See our GST guide.
For a 31 March balance date, IRD's payment dates are:
If your balance date is not 31 March, your dates are different and are shown in myIR.
IRD says use-of-money interest (UOMI) is a charge for the use of money, not a penalty. It is charged on underpayments and can be paid to you on overpayments. No interest is charged or paid on differences of $100 or less. How it applies depends on your option:
Late payment penalties are separate from UOMI and can also apply.
Tax pooling lets you pay provisional tax through a registered intermediary. The intermediary deposits pooled payments with IRD, and when they are transferred to your account IRD treats them as paid on the date they went into the pool. That can reduce the UOMI you are charged. It can be used with the standard, estimation and ratio options. IRD publishes a list of registered tax pooling intermediaries. Compare providers' terms before you sign up.
Help is worth it in your first two years, when your income jumps or drops, when you are choosing between the estimation, ratio and AIM options, or when you have a one-off taxable gain such as a bright-line sale. If you have a tax agent, IRD's extension of time can move your end-of-year tax due date from 7 February to 7 April. See also our business structure guide and rental property tax guide.
Look for a firm that does this work every week, not once a year. Some questions are worth asking before you sign up:
Compare local firms on our tax accountants in Hamilton page, and read how to choose an accountant for a fuller checklist.
This guide is general information, not tax or financial advice. Talk to an accountant about your situation.
You pay provisional tax if your residual income tax in your last return was more than $5,000. It is common for the self-employed, contractors, landlords and people with overseas income.
With a 31 March balance date on the standard or estimation option, the dates are 28 August, 15 January and 7 May. The ratio option has six instalments, and AIM follows your GST dates.
Generally last year's residual income tax plus 5%, or the residual income tax from two years ago plus 10%, depending on when last year's return is filed.
If your residual income tax is under $60,000 and you use the standard option, IRD charges or pays interest only from the day after your end-of-year tax due date.
All 1671 firms, ordered by the same published criteria.