What is provisional tax, and do I pay it in my first year?
Provisional tax means paying your income tax in instalments during the year. You must pay it if the end-of-year tax on your last tax return was more than NZ$5,000. You then pay it in instalments the following year. Your first year in business is not tax-free. If you are not required to pay provisional tax but expect your end-of-year tax to be more than NZ$5,000, you can choose to become a provisional taxpayer.
Official figures
- Do sole traders need to register?
- No. You do not need to register yourself or your business with any government agency. You only need to tell Inland Revenue that you have started working for yourself.1
- What sole traders need
- A personal IRD number (for income tax and GST), any government licences and permits your business needs, and any qualifications or registrations your industry requires.1
- NZBN for sole traders
- Optional, but recommended.1
- Company name reservation fee
- NZ$10 (plus GST)6
- Company registration fee
- NZ$118.74 (plus GST)6
Official sources
- Becoming a sole traderBusiness.govt.nz (MBIE) · business.govt.nz
- Incorporating a companyCompanies Office · companies-register.companiesoffice.govt.nz
- Who can be a directorCompanies Office · companies-register.companiesoffice.govt.nz
- Registering for GSTInland Revenue · ird.govt.nz
Read the full guide: Starting a business: sole trader, company and GST registration →
People also ask
- Where do I register as a sole trader in New Zealand?
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- At what turnover do I have to register for GST?
- My business earns less than NZ$60,000. Can I register for GST voluntarily?
- I don't live in New Zealand. Can I be the only director of an NZ company?
- What is an NZBN, and do sole traders need one?
Answers are based on official New Zealand government pages. Check the official source before you act. This is not immigration, legal or tax advice.
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