GST & provisional tax set-aside planner

Why set tax aside every week?

GST and provisional tax arrive in lumps on fixed dates, but the money that pays them comes in every day. If it stays in the operating account, it ends up funding stock, wages and the odd emergency, and the due date becomes a scramble. Moving a set amount into a separate tax account each week turns those lumps into a routine. It's the single habit that most reliably keeps New Zealand businesses on the right side of Inland Revenue, and it's one of the first things a lender looks for.

How the planner calculates your set-aside

GST. Net GST is 15% of your sales minus 15% of your GST-claimable costs, both excluding GST. Wages, interest and most bank fees carry no GST, so they don't reduce the bill. The planner spreads your sales across the year using the pattern you choose, groups the months into your GST periods, and dates each payment: the 28th of the month after the period ends, except 7 May for the period ending March and 15 January for the period ending November. More on the choices in GST filing frequency and how much GST to set aside.

Provisional tax. You're in provisional tax if last year's residual income tax was more than $5,000. Standard uses last year's tax plus 5%, in three instalments (two for six-monthly GST filers). Estimation uses your own figure. Ratio approximates a percentage of each two-monthly period's sales. AIM spreads your expected tax across the year following your sales pattern. For instalments in next year's cycle, the standard option is based on this year's expected tax plus 5%. The four options are compared in provisional tax options, and every date is listed in provisional tax dates.

Terminal tax. If you enter tax still owing for last year, the planner adds it on 7 February, or 7 April if your tax agent has an extension. It also estimates this year's terminal tax (expected tax minus provisional tax) when that date falls within the next 12 months. See terminal tax explained.

Why you might need a top-up as well

The weekly figure is a year's tax divided by 52. That's the right long-run habit, but if a large date is close and your tax account is light, a weekly transfer won't build up enough in time. The planner checks every upcoming date against your current balance plus the weekly amount, finds the tightest one (the pinch point) and tells you how much to move across now so every later date is covered. Seasonal businesses often see a pinch after their busy months, when a large GST bill lands just as takings slow.

Reading the cash runway

Runway is how many weeks your operating cash would cover your fixed outgoings if receipts paused. If your tax account needs a top-up, the planner shows what runway would be left after finding that top-up from operating cash. That's the number that tells you whether a tight tax date is an inconvenience or a real risk. Our guide to how big your cash reserve should be helps you set a target.

When the calendar shows a gap

Seen early, a gap has plenty of fixes: invoice faster, ask for deposits, revisit your provisional tax option with your accountant, or talk to Inland Revenue about an instalment arrangement. Some owners prefer to pay Inland Revenue in full and repay a lender over a planned term instead. If that's worth exploring, we consider unsecured options for trading businesses, typically $5,000 to $500,000, and loans secured on property from $20,000 to $5,000,000. There's no credit check to enquire, your details aren't sent around to other lenders, and a real person reads what you send. Fill in the form accurately and the first call can be about your actual dates. Start an enquiry.