<P> A provisional tax payer is a person or a company that had a residual income tax of more than $2500 in the previous financial year . There are three options for paying provisional tax; standard method, estimated method and GST Ratio option . </P> <Ul> <Li> Under the standard method provisional tax payers make three provisional tax installments through the year based on the previous years tax liability . </Li> <Li> The standard method is the most common method . However a provisional tax payer can choose to estimate their provisional tax payments . Estimation allows the business owner to pay less or more tax depending on how they think their business is performing . Any underpayment is subject to interest, and no interest is paid on over payment, so it is important that they estimate their profit accurately . </Li> <Li> A provisional tax payer can also pay provisional tax using the GST ratio option . This is based on what your previous year's residual tax liability was and what your GST Taxable supplies were for that year . You then apply this percentage to your current period GST return . Under this option you pay provisional tax at the same time as you pay GST . </Li> </Ul> <Li> Under the standard method provisional tax payers make three provisional tax installments through the year based on the previous years tax liability . </Li> <Li> The standard method is the most common method . However a provisional tax payer can choose to estimate their provisional tax payments . Estimation allows the business owner to pay less or more tax depending on how they think their business is performing . Any underpayment is subject to interest, and no interest is paid on over payment, so it is important that they estimate their profit accurately . </Li>

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