Your provisional tax equals your previous year’s residual income tax plus 5%. However, provisional tax paid in the past may not reflect how your business has performed over the current financial year.
Your final income for this financial year will determine whether you’ve overpaid or underpaid provisional tax. Once you’ve filed your accounts, you might get a tax refund or have to pay more, depending on your 2023-2024 taxable income.
Underpaid tax can lead to use of money interest (UOMI) being charged by Inland Revenue, and UOMI has increased in recent years.
If you believe you’re likely to underpay or overpay provisional tax based on your 2023-2024 income, contact us to discuss options including tax financing which may help with cashflow.