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Provisional tax and UOMI - beware the Cent!

When sending your provisional tax reminder letters to clients for their 28 August provisional tax instalment (assuming standard balance date) make sure you state the amount payable down to the last cent, or at least round up to the nearest whole dollar.

Inland Revenue's system calculates provisional tax payments to the cent (ie, $253.13 rather than $253.00).  If the exact amount is not paid by the due date, the concessional UOMI provisions will not apply and your client may be liable for UOMI from the first instalment date.

While this does seem a bit unfair, that is how the legislation works and to change it would require an amendment to the legislation.

Inland Revenue has been notified of this issue and a recommendation put forward that their system should build in a buffer of a few dollars.

Contact the Knowledge Shop team if you would like to discuss this further.

Provisional tax and UOMI - beware the Cent!

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