Provisional tax 2026–27: the dates, the cash crunch and how to plan for it

What is provisional tax, in plain terms?

Provisional tax is income tax paid during the year rather than all at once after it. Instead of waiting until your return is filed and then paying a large bill, Inland Revenue asks businesses and self-employed people with enough income to pay in instalments as they go.

According to Inland Revenue, you have to pay provisional tax if you had to pay more than $5,000 tax at the end of the year from your last return — in tax language, your residual income tax was more than $5,000. Once you’re in, the dates become fixed points in your cash flow calendar.

What are the 2026–27 dates?

For a 31 March balance date using the standard or estimation option, Inland Revenue lists three instalments: 28 August, 15 January and 7 May. For the 2026–27 income year (1 April 2026 to 31 March 2027) that gives:

Instalment	Due date
1	28 August 2026
2	15 January 2027
3	7 May 2027

The ratio option works differently: Inland Revenue says you’ll pay in six instalments, linked to your GST turnover, and lists 28 October among the ratio-option dates for March balance dates. The AIM option (accounting income method) uses your accounting software to calculate payments, with the number of instalments depending on how often you file GST.

If your balance date isn’t 31 March, your dates are different. Check them in myIR.

Why do these dates cause so many cash crunches?

Three reasons:

1. They’re lumpy. Under the standard option, a year’s tax arrives in three large pieces rather than twelve small ones.
2. They’re based on last year. The standard option generally works off your previous year’s tax. If last year was great and this year is slower, the instalments can feel out of proportion to current income.
3. They clash. 15 January lands straight after Christmas, when many businesses are closed or quiet and have just paid holiday wages. 28 August is mid-winter for tourism and many outdoor trades. 7 May follows the end of the financial year for March balance dates, when accountants are busy and cash is often committed elsewhere.

What happens if you miss a date?

Inland Revenue charges a late payment penalty of 1% the day after the due date and a further 4% on the seventh day after. Interest can also apply. Inland Revenue notes that first-time late payers within a two-year period may get a grace period before penalties are charged, but it’s not something to plan around.

If you can’t pay in full, talk to Inland Revenue before the date. You can apply for an instalment arrangement in myIR; interest is still charged and included in the instalments, but engaging early is far better than letting the debt drift. Our comparison of an IRD instalment arrangement vs a loan sets out the trade-offs.

How do you plan cash so instalments don’t bite?

Open a separate tax account. Every time money comes in, move a set share into it — enough to cover GST and provisional tax. When the date arrives, the money’s already there. This single habit prevents more tax stress than anything else.

Put the dates in your forecast. business.govt.nz recommends cash flow forecasting to avoid financial trouble. A twelve-month forecast with the three provisional tax dates, GST dates and PAYE (due by the 20th of the following month for small employers) shows exactly where the squeeze will come.

Choose the option that fits your income. If your income is uneven, the ratio or AIM option may spread payments more in line with what you’re earning. Talk to your accountant.

Estimate if this year is lower. Inland Revenue’s estimation option lets you estimate what you think your residual income tax will be and pay that instead. It warns that interest and penalties can apply if your estimate falls short of the actual figure, so get your accountant’s help with the number.

Arrange standby funding in advance. A business line of credit set up in a strong month can cover an instalment that lands in a weak one, and be repaid when trade picks up.

What does a sensible plan look like?

Illustrative example. A Queenstown tourism operator with a March balance date pays provisional tax under the standard option. Its busy seasons are summer and ski season; August is strong but January is mixed because of holiday closures and wages. The owner moves a set share of every booking into a tax account. In November, the forecast shows the account will be short for the 15 January instalment because of a slow spring. Rather than wait, the owner draws on a line of credit in early January, pays on time and repays from February bookings. No penalties, no stress.

Illustrative example. A self-employed Taranaki consultant has just tipped over the $5,000 residual income tax threshold for the first time and wasn’t expecting provisional tax. With the 28 August instalment approaching and a large client paying late, she applies for a small unsecured loan repaid over four months, sets up a tax account, and asks her accountant whether the estimation option suits her income for the rest of the year.

When does borrowing for provisional tax make sense?

Borrowing to pay tax isn’t ideal, but it can be the least costly option when:

• the shortfall is temporary — a slow month, a late customer, a seasonal dip;
• the penalty and interest cost of paying late would exceed the cost of a short loan;
• you have a clear source of repayment within a few months; and
• you’re putting a reserve habit in place so it doesn’t recur.

It makes less sense if the business is regularly short at every tax date, which suggests a deeper cash flow or profitability issue. In that case, talk to your accountant first. For self-employed people specifically, our page on business loans for the self-employed explains how lenders view tax obligations.

What if you’re already behind?

If an instalment has already been missed or you owe Inland Revenue from earlier periods, see paying IRD debt fast. In early 2026 Inland Revenue described a targeted campaign on overdue GST and employer debt, so engaging early matters. For seasonal businesses, our page on funding a seasonal dip covers how to align funding with the busy and quiet parts of the year.

How does provisional tax interact with GST?

For many businesses the bigger squeeze is the combination. GST is charged at 15% and paid on your filing frequency; provisional tax arrives on its own schedule. When a GST return and a provisional tax instalment fall close together — which can happen around late August and mid-January for some filers — the combined outflow can be several times a normal month’s tax. Map both in the same forecast so you see the stacking before it happens, and size your tax-account transfers to cover both.

Quick-reference checklist

• Confirm your option (standard, estimation, ratio or AIM) and balance date in myIR.
• Put 28 August 2026, 15 January 2027 and 7 May 2027 in your calendar (March balance date, standard or estimation).
• Open a separate tax account and automate transfers into it.
• Build the dates into a twelve-month cash flow forecast.
• Ask your accountant whether estimation or another option suits your income.
• Arrange standby funding while things are calm, if a crunch looks likely.

Instalment due and the account’s light? Find out your options — no credit check to ask.

Don’t let a tax date become a crisis

A provisional tax date is the most predictable cash crunch in business. If one is coming and the money isn’t there, we can help you compare a short loan, a line of credit and an instalment arrangement. Enquiring doesn’t involve a credit check, and your details go to one specialist rather than to a queue of lenders. Tell us accurately how much is due, when, and when your next income is expected, and we’ll help you meet the date without overpaying. Start your application.