120KE Provisional tax and rules on use of money interest

(1)

A provisional taxpayer’s residual income tax for a tax year is due and payable in 1 instalment on their terminal tax date if—

(a)

they have paid all instalments under 1 of the standard methods described in section RC 5(2) or (3) of the Income Tax Act 2007 on or before the instalment dates for the tax year in accordance with sections RC 9 and RC 10 of that Act, or they have no obligation to pay provisional tax for the tax year under section RC 3(3) of that Act; and

(b)

their residual income tax is less than $60,000 for the tax year; and

(c)

they have not estimated their residual income tax under section RC 7 of the Income Tax Act 2007 for the tax year; and

(cb)

they have not used the AIM method under section RC 7B of that Act in the tax year to determine the amount of provisional tax payable for the tax year; and

(d)

they have not used a GST ratio under section RC 8 of that Act in the tax year to determine the amount of provisional tax payable for the tax year; and

(e)

there is no provisional tax interest avoidance arrangement in relation to the person.

(2)

When subsection (1) applies, in relation to the payment of provisional tax under section RC 9(3) or (5), or RC 21 of the Income Tax Act 2007, the provisional taxpayer—

(a)

is not liable for use of money interest under section 120D for unpaid tax until their terminal tax date:

(b)

is not entitled to use of money interest under section 120D for overpaid tax until their terminal tax date.

(3)

A provisional taxpayer’s residual income tax for a tax year is due and payable in 1 instalment on their terminal tax date if—

(a)

they use a GST ratio to determine the amount of provisional tax payable for the tax year; and

(b)

they use the GST ratio as the determination method for the whole of the corresponding income year.

(4)

When subsection (3) applies, in relation to the amount of provisional tax paid or payable for the period in the corresponding income year in which the GST ratio is used, the provisional taxpayer—

(a)

is not liable for use of money interest under section 120D for unpaid tax until their terminal tax date:

(b)

is not entitled to use of money interest under section 120D for overpaid tax until their terminal tax date.

(5)

Subsections (6) and (7) apply if, under section RC 18 of the Income Tax Act 2007, a provisional taxpayer changes the way they determine the amount of provisional tax.

(6)

A taxpayer is not entitled to use of money interest for overpaid tax under section 120D until the later of—

(a)

the day after the date—

(i)

on which they inform the Commissioner under section RC 18(2); or

(ii)

set out in section RC 18(3) (as the case may be):

(b)

the day after their last ratio instalment date.

(7)

For debit interest, the taxpayer is liable for use of money interest—

(a)

for the period of the tax year in which they use the GST ratio, from the later of the dates set out in subsection (6):

(b)

for the period of the tax year in which they estimate their provisional tax, from whichever dates of instalments B, D, and F for their corresponding income year occur 30 days after their last ratio instalment date.

(8)

In this section, a reference to an instalment classified by the alphanumeric designations A to F1 is a reference to a date in the table in Schedule 3, Part A of the Income Tax Act 2007 on which an instalment of provisional tax is payable by a provisional taxpayer for an income year that corresponds to a tax year.

Section 120KE: inserted, on 1 October 2007 (applying for income years corresponding to 2008–09 and subsequent tax years), by section 243(1) of the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Section 120KE(1)(a): replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 116(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 120KE(1)(b): amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 116(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 120KE(1)(c): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 120KE(1)(cb): inserted, on 1 April 2018 (applying for the 2018–19 and later income years), by section 56(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 120KE(1)(d): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 120KE(1)(e): replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 116(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 120KE(2): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 120KE(5): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).

Section 120KE(6): replaced (with effect on 1 October 2007), on 19 December 2007 (applying for 2008–09 and later income years), by section 240(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 120KE(6)(a)(i): amended, on 2 June 2016, by section 160 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 120KE(8): amended, on 1 April 2018 (applying for the 2018–19 and later income years), by section 56(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).

Section 120KE(8): amended, on 1 April 2008 (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).