IR4 Question 31 Initial provisional tax liability

A company has an initial provisional tax liability if it:

• starts to derive income from a taxable activity in the tax year, and

• had not derived gross income from a taxable activity within the preceding four years, and

• has residual income tax (RIT) of $60,000 or more in the current year.

New businesses don’t pay provisional tax in their first year of operation because there is no RIT from the previous year to base the calculation on.

However, companies that have an initial provisional tax liability may be charged interest from the first, second or third instalment date. The instalment date interest applies from is determined by the business start date. Some new businesses make voluntary payments to reduce liability for interest.

More information about the dates interest applies from is available in the guide Provisional tax (IR289).

There are special rules about how interest is calculated when a company has an initial provisional tax liability and has changed its balance date. For further information, see our Provisional tax (IR289) guide.

Print the date the company started to derive income from the taxable activity in Box 31.