Terminal Tax
Definition
The final tax bill payable at year-end after reconciling provisional tax paid and actual income tax liabilities.
Key Takeaways
- Terminal Tax is the final tax payment or refund after filing your annual income tax return in NZ.
- Represents the difference between total tax liability and amounts already paid via PAYE or provisional tax.
- Due by February 7 (or April 7 with a tax agent) for provisional taxpayers.
- Can be positive (you owe) or negative (refund due), with interest on late payments.
Detailed Explanation
Terminal Tax is the final income tax payment (or refund) due after your annual income tax return is filed in New Zealand. It represents the difference between your total tax liability for the year and the amount you've already paid through PAYE, provisional tax, or other withholding taxes. Terminal tax can be positive (you owe money) or negative (you're due a refund).
For taxpayers on provisional tax, terminal tax must be paid by February 7 of the following year (or April 7 if you use a tax agent). If your terminal tax exceeds $60,000, you can request an installment arrangement with Inland Revenue (IRD). Interest may be charged on late payments, while refunds are credited directly to your bank account.