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 window, there are five radio buttons, one for each of the calculation methods:
| Method | Description |
|---|---|
| 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:
Enter the date you advised the IRD that you'll be paying an estimate as the Advised IRD on date. If this field isn't set, Tax Manager will assume you haven't notified the IRD that you'll be paying an estimate. |
| AIM method | This method is used for clients using the AIM method, and does not calculate provisional tax. |
| 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. |
In certain cases, a calculation method is not relevant for the client's situation and you will not be able to select it. For example, you cannot select Standard (2 year prior) if last year's income tax return has been filed.
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.
Go to any of the following Tax Manager windows:
Summary view
Transactions view
Tax notice details view.
On the TASKS bar, click Provisional tax calculator. The Provisional Tax Calculation window appears with the most recently-saved calculation method selected by default.
To see the results of the selected calculation method, select from the available radio buttons.
Enter any voluntary amounts or estimates that affect the calculation.
When you've 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.
To see the updated information on the Tax Manager Summary view, close and reopen Tax Manager.