Provisional tax payments affected by new IRD update

As IRD rolls out its first batch of automated refunds under its new systems, self-employed individuals are speaking out about issues relating to provisional tax payments.

In a recent report by Stuff, an architect told the news outlet they were unable to submit an IR3 tax return under the new system, as there was no longer an option within the online form for them to continue to pay provisional tax or GST using the previous ratio method.

"I could just submit it with the 'standard option' ticked and then spend the rest of the year arguing with them how I am going to pay my provisional tax and GST," they said.

In response to the issue, Inland Revenue spokesman Baden Campbell confirmed an issue was impacting some businesspeople who paid provisional tax using a technique called the "ratio method". This is widely designed for businesses or self-employed workers that experience significant variations in their income throughout the year, and allows the taxpayer to match tax payments with profits instead.

Campbell said Inland Revenue was investigating the matter, which appeared to affect a "small section of provisional tax customers" who paid provisional tax using the ratio method and who filed tax returns directly, however as the number of reported problems with the new IRD system begin to mount, IR3 filers are advised to take extra caution with their tax this year.

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