Using the provisional tax calculator

The provisional tax calculator allows you to calculate and compare your client’s provisional tax amounts using the standard and estimation calculation methods for a given year.

The information displayed includes:

• amounts used to calculate the provisional tax for the applicable calculation method

• certain fields, identified by a box where you can enter amounts that affect the calculations, e.g., voluntary payments and estimates.

• a list of historical calculations, showing the most recent calculations saved for each calculation method

• a comment box where you can enter free form comments.

When you open the provisional tax calculator, the latest tax information for the selected client is displayed. At the top of the screen, there are five radio buttons, one for each of the calculation methods:

• Standard (2 year prior)

This method calculates provisional tax due based on the residual income tax (RIT) from the year before last.

• Standard (1 year prior)

This method calculates provisional tax due based on the RIT from last income year’s tax return.

• Estimate

This method ignores prior tax returns and calculates provisional tax due based on the estimates you enter into the calculator.
You can enter either:

• an estimate of Taxable income and Tax credits

OR

• an Estimate of the provisional tax to be paid.

Enter the date you advised the IRD that you will be paying an estimate as the Advised IRD on date. If this field is not set, Tax Manager will assume you have not notified the IRD that you will be paying an estimate.

• Ratio method

This method is used for clients using the ratio method and does not calculate provisional tax.

• Standard (current year)

This method calculates provisional tax due based on the RIT from current income year’s tax return.

By selecting different calculation methods and entering different estimates you can use the provisional tax calculator to evaluate the provisional tax payable in different scenarios.

To use the provisional tax calculator

1. Click Provisional tax calculator on the Tasks bar on any of the following Tax Manager screens:

• Summary view

• Transactions view

• Tax notice details view.


The Provisional Tax Calculation window opens, with the most recently saved calculation method selected by default.

2. Select from the available radio buttons to see the results of the selected calculation method.

3. Enter any voluntary amounts or estimates that affect the calculation.

4. When you have decided which calculation you want to use for this client, ensure that the relevant radio button is selected and click OK.

The provisional tax calculator closes and any changes for the selected calculation method are saved to the history table.

Related topics

Viewing the tax position summary for a client

Managing Tax Notices using the Tax Notice page

Using the quick tax calculator

Using the Student loan interim calculator

Using the interest calculator