NZ Ratio Option for Provisional Tax: Who Qualifies
17 October 2026 · Guide · Not tax advice
Educational information only. Not tax, legal or financial advice. We are not Inland Revenue (IRD) or ACC and are not affiliated with them. Check ird.govt.nz or ask a qualified tax agent. Sources read October 17, 2026. Anything marked expected should be re-checked. Examples use made-up numbers. This page contains no affiliate links.
Short answer: The IRD says the ratio option lets you match provisional tax payments to business cash flow, and is useful if your income varies or is seasonal. You must meet all of its criteria, including GST-registered for the whole of the previous year, previous-year RIT above $5,000 and up to $150,000, and monthly or 2-monthly GST returns. You apply at or before the start of the income year.
Criteria (IRD)
- In business and registered for GST for the whole of the previous tax year and part of the year before.
- Previous year RIT (2020 or later) greater than $5,000 and up to $150,000.
- You file GST returns monthly or 2-monthly.
- You are not a partnership.
- The ratio percentage the IRD calculates is between 0% and 100%.
Applying
Apply in writing, in myIR or by phone, stating the year it starts, at or before the beginning of the income year. The IRD's example: for a 31 March balance date and a ratio year starting 2021, you needed to tell the IRD by 31 March 2020. The date cannot be backdated.
Instalment dates (March balance date)
IRD's table lists six instalments: 28 June, 28 August, 28 October, 15 January, 28 February and 7 May (search excerpt of the IRD dates page).
You must stop if
You cease GST registration, any GST return is 60 or more days overdue, your ratio percentage is outside 0-100%, you change to 6-monthly GST, or a return is filed where RIT is below $5,000 or above $150,000. You can stop at any time by phone or email. If you stop after the first payment date you must use the estimation option for the rest of the year.
Interest
If you apply the option correctly and pay what is calculated, you will not pay use of money interest if payments fall short of the end-of-year liability, and will not receive it if you overpay.
Related
Standard option · Estimation option · GST registration and filing · Tax calendar
FAQ
Is this for small sole traders with six-monthly GST? No: six-monthly GST filers cannot use it.
Where is the ratio calculated? The IRD calculates your ratio percentage for you.
What we could not verify
- Instalment dates (seen only in a search excerpt of the IRD dates page).
- IR289 and IR235 guides not read; the page's examples refer to the 2020 year.
- How the ratio percentage is calculated.
Sources (official)
- Inland Revenue (IRD), Ratio option — official page (read in full 17 October 2026; no review date shown)
- Inland Revenue (IRD), Payment dates for provisional tax — official page (search excerpt only)
- Inland Revenue (IRD), Provisional tax — official page (read in full 17 October 2026; no review date shown)