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IRD To Introduce New Option For Businesses

IRD To Introduce New Option For Businesses

Inland Revenue will soon make it easier for businesses to cover their provisional tax payments.

From the start of the 2008/2009 tax year, Inland Revenue will introduce a new and optional way for businesses to calculate their provisional called the ratio option.

The ratio option will allow eligible businesses to base their provisional tax payments on their actual sales. This means that their payments will more accurately reflect their income.

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."

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, and recommended that businesses speak with their tax agents or seek other professional advice before applying.

This new option is one of several changes being made to simplify tax for small to medium-sized businesses.

Other changes include combining the provisional tax and GST due dates, which will provide standardised due dates for businesses and enabling them to pay these taxes at the same time.

More information about the changes, including the criteria businesses need to meet to use the ratio option can be found at http://www.ird.govt.nz/provisional-tax/prov-tax-changes/

Ends


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