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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2822
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am considering taking on some contract work. I am

Customer Question

Hi, I am considering taking on some contract work. I am currently employed and my employer pays paye and acc for my main job. My question is should I take on an additional contract would I have to pay provisional tax on it? or can I just pay tax on the additional income as per usual without having to register for provisional tax. It's not a large sum of money so would rather not take the extra job if the tax is going to be a hassle.
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: nope
Submitted: 3 months ago.
Category: Tax
Expert:  Barbara replied 3 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

If you have more than $2,500 of tax to pay at the end of the year from your last income tax return, you'll have to pay provisional tax the FOLLOWING YEAR. This usually happens when you earn income without having tax deducted during the year.

Based on the information you provided, you will not have to register and pay for provisional tax this year.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Customer: replied 3 months ago.
that $2500 limit is only calculated on the additional/contract income? How do I Pay tax on the additional income if I'm not paying provisional tax on it?
Expert:  Barbara replied 3 months ago.

You have to owe more than $2500 IN TAX for one year in order to be required to register and pay for provisional tax THE FOLLOWING YEAR. When you file your tax return, you will report the additional income and will know the additional tax amount.

Expert:  Barbara replied 3 months ago.

The following link contains information regarding provisional tax you will find helpful:

http://www.ird.govt.nz/provisional-tax/understanding-provisional-tax/understanding-provisional-tax.html

Expert:  Barbara replied 3 months ago.

Just following up with you to see if you have any other questions or concerns. If so, please let me know, and I will be happy to assist you further.

Best regards,

Barb