Provisional Tax NZ: Who Pays, How It’s Worked Out and Due Dates

Short answer: Provisional tax is income tax paid in instalments during the year instead of in one lump sum after it ends. You must pay it if your residual income tax, the tax left to pay after PAYE and credits, was more than $5,000 in your last return. On the standard option you pay last year’s residual income tax plus 5%, split into three instalments due 28 August, 15 January and 7 May. For the 2027 tax year those are 28 August 2026, 15 January 2027 and 7 May 2027.

Provisional tax is not an extra tax. It is your ordinary income tax, at the NZ tax brackets, collected earlier. Everything here follows Inland Revenue’s provisional tax guidance and assumes a standard 31 March balance date: the 2026 tax year is 1 April 2025 – 31 March 2026 and the 2027 tax year is 1 April 2026 – 31 March 2027. For how it fits with GST, ACC and your IR3, see self-employed taxes in NZ and the New Zealand guides hub.

What is provisional tax in NZ?

Provisional tax is how Inland Revenue collects income tax during the year from people whose income has no PAYE taken out. Inland Revenue lists the typical provisional taxpayer as someone with self-employed income, rental income, contracting income, partnership income or overseas income. The instalments you pay during the year are credited against the tax shown on your IR3. If you paid too little, you pay the balance as end-of-year (terminal) tax, due 7 February after the year ends, or 7 April if you have a tax agent with an extension of time (timelines at the end of the tax year). If you paid too much, you get a refund.

Do I have to pay provisional tax?

You have to pay provisional tax if your residual income tax (RIT) in your last return was more than $5,000. RIT is the tax on your taxable income minus PAYE deducted and most tax credits.

The test always looks back one year. Inland Revenue’s own example: if your RIT in your 2023 return was more than $5,000, you pay provisional tax during the 2024 tax year. So:

If your RIT was over $5,000 in your…	…you pay provisional tax during the…
2025 return (year ended 31 March 2025)	2026 tax year (1 April 2025 – 31 March 2026)
2026 return (year ended 31 March 2026)	2027 tax year (1 April 2026 – 31 March 2027)

You do not usually register separately. Your status follows from your return. If you are not a provisional taxpayer yet but expect your tax for the year to be more than $5,000, Inland Revenue allows you to choose to become one and start paying early.

On 2026–27 rates, a sole trader with no other income and no tax credits crosses the $5,000 line at roughly $35,000 of profit.

What are the provisional tax dates for 2026 and 2027?

On the standard option with a 31 March balance date, the three instalments are due on 28 August, 15 January and 7 May.

Instalment	2026 tax year	2027 tax year
First	28 August 2025	28 August 2026
Second	15 January 2026	15 January 2027
Third	7 May 2026	7 May 2027

At the time of writing (October 2026), the next instalment is 15 January 2027. Your dates are different if you file GST six-monthly, use the ratio or AIM option, or have a non-standard balance date; Inland Revenue’s guide IR289, Provisional tax, lists them. GST returns have their own calendar, covered in GST due dates.

How is provisional tax calculated under the standard option?

Under the standard option, your provisional tax is your previous year’s RIT plus 5%, divided into three equal instalments. That applies if you filed the previous year’s return on or before the first instalment date.

Example. Your RIT in the 2026 return was $9,000. Your provisional tax for the 2027 tax year is $9,000 × 1.05 = $9,450, paid as three instalments of $3,150 on 28 August 2026, 15 January 2027 and 7 May 2027.

If you have not filed last year’s return by an instalment date, Inland Revenue uses your RIT from two years ago plus 10% for those instalments instead. An older, lower figure means a bigger bill later; filing your IR3 before 28 August avoids that. The IR3 explained guide covers the return itself.

The standard option ignores how this year is actually going. If your income has jumped, you will owe the difference at terminal tax; if it has fallen, you will have paid too much and get it back after you file.

Which provisional tax option should I use?

There are four options. Most sole traders start on the standard option because it needs no forecasting and gives interest protection, explained below.

Option	How the instalments are worked out	Suits
Standard	Last year’s RIT + 5% (or two years ago + 10%), in three instalments	Steady income; anyone new to provisional tax
Estimation	Your own estimate of this year’s RIT, which you can revise during the year	A big drop in income you can forecast with confidence
Ratio	A percentage of your GST taxable supplies, paid with your GST returns	GST-registered businesses with uneven monthly income that meet the eligibility rules
AIM (accounting income method)	Calculated from your actual results through approved accounting software as you go	Businesses already keeping their books in AIM-capable software

The estimation option carries the most risk: if your estimate turns out too low, interest can be charged on the shortfall, and the safe harbour below does not apply once you have estimated. IR289 sets out the eligibility rules for ratio and AIM.

Why is the second year of self-employment the hardest?

Because in year two you can end up paying two years of income tax within about nine months.

In your first year of business you generally have no prior-year RIT over $5,000, so you are not a provisional taxpayer and pay nothing during the year. The whole first-year bill is due after the year ends, as terminal tax. Meanwhile that first return has just made you a provisional taxpayer for year two.

Example. You start trading on 1 April 2025, make $60,000 profit in each of your first two years with no other income, and file your first IR3 before 28 August 2026.

What is due	Amount	When
2027 tax year, first instalment	about $3,577	28 August 2026
2027 tax year, second instalment	about $3,577	15 January 2027
2026 tax year, terminal tax	$10,220.50	7 February 2027 (7 April 2027 with a tax agent)
2027 tax year, third instalment	about $3,577	7 May 2027

7 February 2027 is a Sunday. When a due date falls on a weekend or public holiday, Inland Revenue accepts payment on the next working day.

The 2027 instalments are $10,220.50 × 1.05 = $10,731.53, split three ways. Between August 2026 and May 2027 that is about $20,950 of income tax, plus ACC levies, which ACC invoices separately after your IR3. See ACC levies for the self-employed.

The fix: set aside a share of every payment from your first invoice. If you expect your first-year tax to exceed $5,000, you can choose to pay provisional tax voluntarily in year one and spread the load.

Will I be charged interest on provisional tax?

Possibly. Inland Revenue charges use-of-money interest on tax paid late or short, and pays interest when you have overpaid. From 16 January 2026 the rates are 8.97% a year on underpayments and 2.25% a year on overpayments. Interest is calculated daily and does not compound. These rates change by regulation, so check the current figure before relying on it.

The standard option gives you a safe harbour. Your RIT is treated as due in one amount at your terminal tax date, with no use-of-money interest for paying it then, if:

• your RIT for the year is less than $60,000,
• you paid each standard-option instalment on time (or had no obligation to pay), and
• you did not estimate your RIT.

If your RIT is $60,000 or more on the standard option, you are exposed to interest on any amount not paid by your final instalment. Late or missed instalments can also attract late payment penalties. Inland Revenue’s page on interest on provisional tax explains how each option is treated.

Keeping profit visible all year, and where does Keel fit?

Provisional tax rewards knowing your numbers before 31 March: whether this year is running ahead of last year, and whether the money for the next instalment is actually there.

Keel: Invoice Maker & Receipts, an iPhone app by Ilura Technology OÜ, keeps the records that tell you. You create quotes that become invoices in one tap, send PDF invoices, capture receipts and expenses, log business mileage, and keep everything under the job and customer it belongs to. “Who owes you” shows unpaid invoices and prepares reminder drafts you review and send yourself; nothing goes out automatically. Records stay on your iPhone, with no account, no bank connection and no cloud sync; the App Store privacy label reads “Data Not Collected”.

Keel does not calculate your provisional tax, choose an option for you, file your IR3 or connect to Inland Revenue. It keeps the invoices and expenses that you or your accountant work from. It is free with no invoice limit (free invoices carry a small “Made with Keel” footer), and Keel Lifetime is a one-time purchase of $249.99 USD (the App Store shows your local price) that adds custom branding, signature, premium templates and accountant-ready exports and reports. Keel on the App Store.

Frequently asked questions

When is provisional tax due in NZ? On the standard option with a 31 March balance date, provisional tax is due in three instalments on 28 August, 15 January and 7 May. For the 2027 tax year that means 28 August 2026, 15 January 2027 and 7 May 2027. Different dates apply if you file GST six-monthly, use the ratio or AIM option, or have a non-standard balance date.

How is provisional tax calculated in NZ? Under the standard option, take your residual income tax from last year’s return, add 5%, and divide by three. If last year’s return has not been filed by an instalment date, Inland Revenue uses your residual income tax from two years ago plus 10% instead. The estimation, ratio and AIM options calculate it differently.

Do I have to pay provisional tax in my first year of business? Generally not, because the test looks at your previous year’s residual income tax, and in year one you usually have none above $5,000. Your first year’s tax is still owed, as terminal tax due 7 February after the year ends (7 April with a tax agent). You can choose to pay provisional tax voluntarily if you expect a bill over $5,000, which spreads the cost.

What is the provisional tax threshold in NZ? The threshold is residual income tax of more than $5,000 in your last return. Residual income tax is the tax on your taxable income minus PAYE and most tax credits. Once you cross it, you pay provisional tax during the following tax year, not the year in which you crossed it.

What is the provisional tax safe harbour? On the standard option, if your residual income tax for the year is under $60,000, you paid each instalment on time and you did not estimate, no use-of-money interest is charged as long as the tax is paid in full by your terminal tax date. Above $60,000, interest can apply to amounts unpaid by the final instalment.

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This article is general information, not tax advice. Consult a qualified New Zealand tax professional.