The Provisional Tax Return

Xero's Provisional Tax Return is a worksheet for the provisional tax portion of Inland Revenue's GST and Provisional Tax Return form. It helps you calculate the provisional tax your organisation is to pay for the GST period you're running the report for. If you've selected the ratio basis, Xero calculates this for you. If you've selected the estimate or standard basis, Xero doesn't calculate this for you; you'll need to enter it manually. Contact your accountant for more help with calculating your provisional tax due.

Provisional tax is a way of paying your income tax in instalments during the year. Provisional tax is determined by your latest filed income tax return.

Xero's GST Return calculates GST to be paid or refunded for the period and enters this on the Provisional Tax Return.

Image showing Provisional Tax page on GST return.

Select your provisional tax basis before you start your first GST Return in Xero

  1. Go to Reports, then select All Reports.
  2. Under Tax select GST Return.
  3. Complete the GST Number, Frequency, Next Period Due and Accounting Basis fields.
  4. In the Tax Form field, select GST and Provisional Tax (GST103).

    Image showing tax form selected.

  5. In the Calculation field, select your provisional tax calculation method.

    Image showing tax calculation method.

  6. Click Save.

Change your provisional tax basis if you've already finalised a GST return in Xero

  1. Go to Reports, then select All Reports.
  2. Under Tax select GST Return.
  3. Click Edit GST Details.
  4. In the Calculation field, select your new provisional tax calculation method.

    Image showing new prov tax method selected.

  5. Click Save.

Calculations included in Xero's Provisional Tax Return

Manually enter your income tax payable or refundable onto your Provisional Tax Return, based on your latest filed income tax return. Xero automatically populates the return with GST to pay or have refunded.

Provisional tax calculation when using ratio option

The 'Provisional tax calculation when using ratio option' section only displays when:

  • you've selected the ratio option as your provisional tax basis
  • you are in a compulsory payment period.

Payment calculation section

Xero's 'Payment calculation' section lets you calculate your total GST and provisional tax for the period. It also includes the:

  • 'Voluntary provisional tax period' box for you to manually populate if you're in a voluntary period on any of the three methods.
  • ‘Compulsory provisional tax period' box for you to manually populate if you're using the standard or estimate options and it is a compulsory period.

Provisional Tax Return totals

Xero populates the Provisional Tax Return based on:

  • your Xero GST Return (based on GST you've charged and paid during the period of the report)
  • calculation of figures on the Provisional Tax Return.

If you have a GST refund you can enter an amount on your Provisional Tax Return to offset provisional tax. This amount must not exceed your instalment amount, or the refund amount.

Save a draft or finalise your Provisional Tax Return

You can save your Provisional Tax Return as a draft if the GST Return for the same period is in a draft format.

Select Save Draft from the Save menu.

Save a draft or finalise your report.

If you are an accountant using Partner Edition, follow these steps:

  1. Select your name or practice name from the Author menu. Xero defaults to the last name selected.

    Select your practice name from the Author menu.

  2. Click Save.

How GST relates to your Provisional Tax Return

Xero bases your Provisional Tax Return figures on the reporting period and basis chosen for your GST Return for the period you're running the report for.

You won't have access to any GST-related reports when you set your GST basis to None. Set your GST basis to None if your organisation isn't registered for GST with Inland Revenue in Financial Settings.

Set up your organisation's financial details

The following reports are all linked for the period of the GST Return you're completing: