Section RC 18 — Income Tax Act 2007: Changing calculation method

RC 18 Changing calculation method When this section applies (1) This section applies if, after having chosen to use a GST ratio for a tax year, a person liable to pay provisional tax either— (a) chooses another way to calculate the amount of provisional tax payable for the tax year; or (b) is required under section RC 17(1) or (2) to stop using a GST ratio for the corresponding income year. Informing Commissioner of decision to change (2) The person must inform the Commissioner of their decision under subsection (1)(a), and may do this either in writing or by telephone. Subsection (4) or (5) then applies for the remaining instalments of provisional tax for the tax year. Date on which use of GST ratio stopped (3) For the purposes of subsection (1)(b), the date on which the person stops using a GST ratio is, as applicable,— (a) the date their GST registration ends; or (b) the date of the amended assessment of their income tax liability or GST liability for the preceding tax year; or (c) the effective date of a change in taxable period; or (d) the last day of the period in which a return is liable to be provided under the Goods and Services Tax Act 1985 . Changing method before date of instalment A (4) If the person is unable or decides not to use a GST ratio before the date of instalment A, they may choose to determine the amount of provisional tax payable under section RC 5(2), (3) or (5). The person is treated as never having chosen to use the GST ratio method and, for the purposes of section 120KE(5) of the Tax Administration Act 1994, as never having changed the way they determine an amount of provisional tax under this section. Changing method after instalment date (5) If the person is unable or decides not to use the GST ratio after an instalment date, they must determine the amount of provisional tax payable on instalment for the remainder of the income year under section RC 5(5) using the estimation method. For this purpose, the person may provide the estimate in writing or by telephone. Date of application when method changed (6) If the person changes their calculation method under subsection (4) or (5), the date on which the change applies may be a future date agreed between the person and the Commissioner. Other consequences of changing method (7) For the purposes of this section,— (a) the number of instalments and the instalment dates remaining for an income year depend on— (i) the requirements of the method chosen by the person when they stop using the GST ratio; and (ii) the cycle of taxable periods chosen by the person, being either a monthly or 2-monthly basis: (b) a person may change from using a GST ratio to a 6-monthly cycle of taxable periods only if— (i) the requirements of section 15C of the Goods and Services Tax Act 1985 are met; and (ii) their 6-month taxable period is aligned with their balance date under section 15B of the Goods and Services Tax Act 1985: (c) section 120KE(5) to (7) of the Tax Administration Act 1994 applies in deciding whether use of money interest is payable in relation to instalments under the new method. Defined in this Act: amount , assessment , balance date , Commissioner , corresponding income year , GST ratio , income tax liability , income year , instalment date , pay , provisional tax , tax year , taxable period , Compare: 2004 No 35 s MB 17 Section RC 18(2): amended, on 1 April 2008, by section 533(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RC 18(4): amended, on 1 April 2008, by section 533(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).