People who operate a business as a sole trader, limited liability company or other business entity have to account for their own tax progressively during the year. This is referred to as 'provisional tax'. If the tax you have to pay is $2,500 or more on your end of year tax return you need to pay provisional tax the following year.
Provisional tax is payable in three instalments during the year, based on what you expect your tax bill to be. The amount of provisional tax you pay is then deducted from your tax bill at the end of the year. For more information, see the IRD's Provisional Tax booklet (IR 289).
