If you use the standard, estimation or ratio option and you pay less provisional tax than your residual income tax for that year, we may charge you interest.
You may have to pay interest even if you:
- paid your instalments in full and on time
- didn't have to pay provisional tax.
We'll work out the interest charges once your income tax return has been filed. We will not charge interest if you over or underpaid by $100 or less.
We may pay interest to you if you paid more provisional tax than you needed to.
If you use the ratio option
You won't pay or receive interest on your provisional tax instalments. You may on your residual income tax.
Filing your tax return
When you file an income tax return, the provisional tax payments you’ve made will be included in an assessment of your end-of-year tax position. If any provisional tax was overdue when the assessment was calculated it might include late payment penalties.
If you have been charged interest the assessment will show what tax this was charged on. The assessment will say if you owe any end-of-year (terminal) tax, or if you’ll get a refund.
Penalties and interest are usually posted from the date you file your income tax return. The exception to this is when you file your return before your final provisional tax instalment date – when this happens, any penalties and interest are posted after the final instalment date.