Quick answer
To cover a large GST or provisional tax bill in New Zealand, talk to Inland Revenue before the due date about a formal instalment arrangement, check whether tax pooling or a different provisional tax option (such as ratio or AIM) suits your cash flow, and use business funding only for the gap. Paying late without an agreed arrangement can mean penalties and interest at the full rate.
Key points
- GST returns and payments are due on the 28th of the month after the period ends, with 7 May and 15 January exceptions.
- A formal IRD instalment arrangement is treated very differently from simply paying late.
- Tax pooling and the ratio or AIM provisional tax options can smooth payments.
- Finance should fill a short, defined gap — not become a habit for every tax date.
- GST due
- 28th of the month after the period
- Provisional tax trigger
- Residual income tax over $5,000
- First call
- Inland Revenue, before the due date
A big tax bill is a funny sort of goal. It’s money the business has usually already collected — GST on sales, or tax on profit already earned — but it has often been spent on stock, wages or growth by the time the due date arrives. The good news is that Inland Revenue, the timing rules and a little planning give you more pieces to mix than most owners realise.
When are GST and provisional tax actually due?
Getting the dates right is the first piece of the mix.
| Tax | When it’s due | Source |
|---|---|---|
| GST return and payment | 28th of the month after your taxable period ends | Inland Revenue |
| GST for period ending 31 March | 7 May | Inland Revenue |
| GST for period ending 30 November | 15 January | Inland Revenue |
| Provisional tax, standard or estimation option, 31 March balance date | 28 August, 15 January, 7 May | Inland Revenue |
Provisional tax applies if your residual income tax from your last return was more than $5,000. Many owners are caught out in a growth year, when the provisional tax based on last year’s lower profit is followed by a big terminal tax bill.
Which pieces can cover a tax bill?
Talk to Inland Revenue first
Inland Revenue’s own guidance is clear: if you’re having trouble paying, get in touch before it gets worse. A formal instalment arrangement lets you make agreed regular payments, and Inland Revenue says that reduces what you pay overall because fewer penalties apply. Importantly, paying by regular direct debit without an agreed arrangement may still attract penalties and interest at the full rate. You can apply in myIR, and for business customers Inland Revenue typically asks for a twelve-month cash flow forecast (IR591).
Change the shape of provisional tax
Inland Revenue offers four provisional tax options. Two are worth a close look if cash flow is lumpy:
- Ratio option — lets you match provisional tax payments with your business cash flow, linked to your GST.
- Accounting income method (AIM) — Inland Revenue describes it as only paying provisional tax when your business earns a profit.
Neither is a funding source as such, but both can stop provisional tax landing at the worst possible moment. Ask your accountant whether you qualify.
Tax pooling
Tax pooling lets businesses pay provisional tax through a registered intermediary. Inland Revenue treats a transfer to your account as a tax payment from the date it was paid into the pool, which can help when your cash arrives after a due date. Intermediaries charge for this, so compare it with the alternatives.
Fix the GST timing for next time
Many GST surprises come from timing. Deposits received can trigger GST at the time of payment, and the invoice basis means you account for GST when you invoice, even if the customer hasn’t paid. Choosing the right GST basis and filing frequency, and setting aside GST as it’s collected, prevents the next crunch. See our guide on customer deposits and GST timing.
Illustrative mix: a Dunedin events company after a record quarter
Illustrative only; no real business.
A Dunedin events business has a record spring. Its two-monthly GST bill comes in at $48,000, and a provisional tax instalment of $22,000 is due soon after. Most of the cash collected went into deposits for next season’s equipment hire.
- Instalment arrangement agreed with Inland Revenue for part of the provisional tax.
- Customer deposits for summer events come in over the next six weeks: about $25,000 earmarked for GST.
- Owner cash of $10,000.
- A short business facility of about $30,000 bridges the GST due date, repaid from summer event payments.
If your situation looks similar and you’d like a real person to check the bridging piece, start an enquiry. IRD debt is considered case by case.
When is finance the right piece for tax?
Finance can be sensible when:
- the bill is a one-off spike caused by growth, a big sale or an unusual quarter;
- there’s clear money coming in soon — debtors, a contract payment, a seasonal peak;
- the cost of the facility is lower than the penalties and interest of paying late without an arrangement.
It’s a warning sign when every GST date needs a loan. That usually means GST is being used as working capital, prices are too thin, or debtors are too slow. Fix those first: the repayment load test and the guide on freeing up cash before borrowing both help.
What will a lender ask about a tax bill?
- Your filed GST and income tax returns — overdue returns are a red flag for most lenders.
- Any instalment arrangement already agreed with Inland Revenue.
- Where the repayment comes from: debtors, upcoming contracts, seasonal income.
- Bank statements showing the business’s normal cash cycle.
How do you stop the next tax bill becoming a funding problem?
Once this bill is handled, a few habits keep the next one manageable:
- Separate the GST. Move the GST portion of every customer payment into a separate account as it arrives.
- Check your filing frequency. Two-monthly or monthly returns mean smaller, more frequent bills, which can be easier to fund from normal cash flow. Six-monthly filing is only available below $500,000 of sales.
- Watch growth years. If profit jumps, talk to your accountant about the estimation option so provisional tax doesn’t lag behind and arrive as one large terminal bill.
- Forecast tax dates. Put every GST and provisional tax date into your cash flow forecast for the year ahead.
Tax that’s planned for is just another outgoing; tax that surprises you becomes a funding goal.
Ready to fund the tax gap?
Start with Inland Revenue, reshape provisional tax if you can, and line up the cash already on its way. If there’s still a gap, tell us what’s due and when. Enquiring doesn’t involve a credit check, your details aren’t sent around a crowd of lenders, and a real person talks it through with you. Please be accurate on the form — especially what you owe, to whom and by when — so we can point you to the right piece first time.
Frequently asked questions
Can I pay GST in instalments in NZ?
Yes, Inland Revenue offers instalment arrangements for tax debt, and you can apply in myIR. Without a formal arrangement, regular payments may still attract penalties and interest at the full rate.
When is my GST payment due?
GST returns and payments are due by the 28th of the month after the end of your taxable period. The period ending 31 March is due by 7 May, and the period ending 30 November is due by 15 January.
Who has to pay provisional tax?
You pay provisional tax in a year if your residual income tax from your last return was more than $5,000. It's usually paid in instalments during the following tax year.
What is tax pooling?
Tax pooling lets businesses pay provisional tax through a registered intermediary. Inland Revenue treats transfers to your account as paid from the date the money went into the pool, which can help manage timing.
Should I borrow to pay a tax bill?
It can make sense for a short, one-off gap — a big GST bill after a record quarter, for example — when the alternative is penalties. It's risky if tax bills are routinely unaffordable, because that points to a pricing or cash flow problem.