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Terminal Tax Due Dates

We receive a number of queries at this time of year from people trying to understand the due date for their terminal tax.

The majority of income tax payers in New Zealand have a standard balance date of 31 March, which means that their terminal tax is due by:

*  February 7 2012 if their return wasn’t prepared by us or other tax agent with an extension of time agreed with the IRD;

*  April 7 2012 if their return was prepared by us and we have an extension of time agreed with the IRD to file their return.

If the total of your provisional tax payments made during the year are more than the tax owed at the end of the year, you have overpaid your income tax.  The IRD will refund the excess balance unless you choose to transfer it to another year or tax liability or they transfer the balance to other debts you have with the department.

On the other hand, if your provisional tax payments were insufficient to cover your tax liability, the difference is called “terminal tax” and you have to pay the difference by the terminal tax due date.

The date that you need to pay terminal tax is therefore determined by:

*  Your balance date; and

*  Whether you use a tax agent who has an agreed extension of time arrangement with the IRD.

Your goal should be to match your provisional tax payments to ensure that you are not faced with any unpleasant surprises when it comes to paying your final income tax liability.  The IRD will charge penalties and interest on underpayments.

I’m not keen on tax payers paying penalties and interest to the IRD so please feel free to contact us to discuss your options.

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