KEY POINTS:
Businesses who struggle to meet their provisional tax payments during their 'slow season' may be in for some respite.
From the start of the next tax year, Inland Revenue will introduce a new and optional way for businesses to calculate their provisional tax called the ratio option.
The ratio option will allow eligible businesses to base their provisional tax payments on their actual sales.
IRD policy manager Keith Taylor said that the new ratio option will make it easier for businesses to pay their provisional tax, especially if they have seasonal or fluctuating income. "They can now make six variable payments every two months, rather than three equal payments throughout the year."
So you'll still be paying the same amount of money - it's just how and when you pay it, that can be different from before.
Businesses that have a standard 31 March balance date must apply for the ratio option by phone or in writing by the end of this month if they want to use it during the 2008/2009 tax year. Businesses that have a non-standard balance date must apply to Inland Revenue before the start of their 2008/2009 tax year.
Mr Taylor said that the ratio option provides a third choice for businesses. "The estimation or standard options currently used by businesses to calculate their provisional tax can still be used", he said.
He said that the ratio option may not suit all businesses.
More information about the changes, including the criteria businesses need to meet to use the ratio option can be found here.
- NZHERALD STAFF
