MEDIA RELEASE (NZ)

A new survey of New Zealand accountants has found the provisional tax system is out of step with how businesses earn, spend and manage cash flow, prompting calls for change.

Commissioned by Tax Management New Zealand (TMNZ) and Chartered Accountants Australia and New Zealand (CA ANZ), the survey of 334 accountants found the system scores just 6.2 out of 10 for fairness to businesses.

John Cuthbertson, NZ Tax and Financial Services Leader at CA ANZ, said the findings confirm that, while the provisional tax system is working, there are clear pain points.

"A rating of 6.2 out of 10 for fairness tells its own story. Three frustrations dominate: misalignment with business cash flow, payment dates that don't reflect commercial reality, and the penalties and interest businesses can face when things don't go to plan."

"The good news is the system doesn't need to be rebuilt from scratch. Practical changes to improve flexibility could make a significant difference for businesses and the accountants who support them."

The research found 81% of accountants believe clients' cash flow constraints affect their ability to pay provisional tax on time, while 77% identified the 15 January instalment date as particularly challenging.

The 15 January payment date falls during the summer holiday period, when many businesses have lower revenue, higher expenses and GST obligations due at the same time.

“One respondent really nailed it with their comment – ‘15 January is the worst time in NZ for any business owner — GST and income tax are both payable, revenue is down, clients are just back from holiday with no cash coming in,’” said Mr Cuthbertson.

The survey also found:

• 95% of accountants say at least some of their clients are at risk of paying late or underpaying provisional tax each year.
• 98% have dealt with a payment issue in the past 12 months, including missed payments, use-of-money interest or cash flow-related difficulties.
• 75% report their heaviest workload occurs between late March and early May, when provisional tax obligations overlap with year-end accounts and GST compliance work.
• 86% support greater flexibility to defer or reschedule provisional tax payments without becoming non-compliant.

TMNZ Chief Executive Matt Edwards said the findings point to a system challenge rather than a capability issue.

"What this research makes clear is that the biggest barriers aren't really about tax knowledge. They're about timing, visibility and having the right tools to act on information quickly."

“The use of tax pooling, which is valued by two thirds of accountants as a practical solution to cashflow and timing pressures, highlights the kind of flexibility the whole system could benefit from.

"Skilled professionals are spending significant time managing avoidable complexity. It's a system issue, and it's one we can address without starting over."

The survey also found accountants are increasingly looking to technology and more flexible payment arrangements to help businesses manage provisional tax obligations.

Nearly three-quarters expect significant changes to their provisional tax practices over the next two to three years, driven by automation and improved data integration.

“Workflow automation has the potential to transform how provisional tax is managed -reducing the manual burden around payment dates, improving visibility of business tax positions, and freeing accountants to focus on providing growth advice, rather than admin,” said Mr Edwards.

The profession's preferred reforms include:

• Revise the 15 January payment date — widely seen as the least aligned with business reality.
• Flexible payment options — 86% of accountants are interested in the ability to defer or reschedule provisional tax payments without becoming non-compliant.
• Technology and integration — accountants want to be supported by better technology and integration between accounting software and Inland Revenue.

About the research

The Provisional Tax Management in New Zealand survey was conducted online by The Curiosity Company, an independent New Zealand research agency, between 21 July and 9 August 2026.

Participants were recruited via TMNZ, CA ANZ and ATAINZ channels. In total, 334 accountants across New Zealand participated, representing a cross-section of firm sizes, regions, roles and years of experience. 54% held Partner or Director level roles; 54% had more than 20 years’ experience in public practice.

The full report is available free to download