Short answer Paste the prompt below into ChatGPT, Claude, Gemini or Copilot with your own details and you get a plain-English explanation of provisional tax for your situation, a list of dates to check, and questions for your accountant. Works on free plans. Time saved: about an hour of confused reading (estimate).
Why it helps
Provisional tax catches a lot of new sole traders and contractors by surprise. You have a good first year, file your return, and then IRD wants this year's tax in instalments as well as last year's bill. Suddenly there are two lots of tax and some new dates in your calendar.
IRD explains it well, but the pages assume you know the words. AI is good at taking IRD's explanation and your rough situation and putting it in plain English, with an example using your own numbers. It's for understanding, not for working out what you owe. That's your accountant's or IRD's job.
The prompt
Copy it, swap the bits in [square brackets], and paste it into ChatGPT, Claude, Gemini or Copilot.
Explain provisional tax in New Zealand to me in plain NZ English, like I'm a smart friend who's never had to deal with it. My situation: [e.g. sole trader, contractor, landlord, first year in business] Last year's tax to pay (residual income tax), if I know it: [amount or "not sure"] Balance date: [31 March, or other] GST: [not registered / filing monthly, two-monthly or six-monthly] Please: 1. Explain what provisional tax is and why I might have to pay it. 2. Explain the options IRD offers in a few lines each, using IRD's names for them. 3. Show a rough example with my numbers, clearly labelled as an example only. 4. List the dates I should check in myIR. 5. Give me 5 questions to ask my accountant. Rules: base it on IRD's rules as you understand them, but tell me which points I must check on ird.govt.nz because they change. Don't tell me what I owe or which option to choose.
Then keep chatting
Explain residual income tax and terminal tax in two sentences each.
What happens if I pay an instalment late?
I've just started out. Explain why my second year might have a big tax bill.
Step by step
- Gather what you know: last year's tax to pay (from your assessment in myIR), your balance date and how you file GST.
- Fill in the prompt and read the explanation and example.
- Check every date and threshold against IRD's provisional tax pages on ird.govt.nz, or in myIR.
- Take the questions to your accountant, or to IRD if you don't have one.
- Put the confirmed dates in your calendar and set money aside each month so the instalments don't hurt.
Worked example
Example details are made up. Your results will vary, so always read and check before you use them.
Watch out for
- Accuracy: thresholds, dates and interest rules change. Always check the current rules at ird.govt.nz (search "provisional tax") or in myIR before you pay.
- The AI doesn't know what you owe. Your real amounts come from IRD or your accountant. Treat any example as an example.
- Privacy: don't paste your IRD number, myIR login, bank details or a full tax assessment. A rough figure is enough to get the idea.
Go further
If IRD sends you a letter you don't understand, the explain official letters use case breaks it down. To make sure the money's there on the due dates, add the instalments to your simple cashflow forecast.
