To recognise the important role tax agents play in providing advisory services to businesses, TMNZ has launched its Partner Programme to help you deliver more value-added benefits to your clients.
There is a concern amongst accountants that Business Transformation (BT) is going to result in some disruption for the profession as Inland Revenue (IRD) pushes more taxpayers to online self-service.
However, changes to the tax system will also provide opportunities to further strengthen your relationship with clients through advisory services – something more and more firms are moving towards.
For instance, take provisional tax.
Yes, the changes to how and when IRD applies interest and late payment penalties from next month will reduce compliance costs and provide greater certainty around payments for taxpayers using the standard uplift method.
The problem with the new provisional tax regime
However, the dates on which provisional tax falls due will not change.
IRD’s set-in-stone timetable does not always correspond with when clients earn their income or take into consideration cashflow constraints and this can result in a serious problem for them.
After all, clients will still incur interest and late payment penalties from IRD if they do not pay tax on time under the new regime.
The solution: TMNZ Partner Programme
Tax pooling addresses the gaps in IRD’s regime by allowing clients to pay tax on their terms.
Clients paying through Tax Management NZ (TMNZ) can make payments when it suits their cashflow, but have them allocated to the correct provisional tax dates. When they have paid the correct uplift amount on a date, IRD will recognise them as moving back to the standard uplift regime – not something that can be achieved without tax pooling.
TMNZ is making it easier for firms through its Partner Programme to access advice about provisional tax payments under BT to ensure they are providing solutions that mitigate the risks for clients who cannot pay on time or in full, at no extra cost or hassle to accountants.
There are two tiers to TMNZ Partner Programme: Standard and Premium.
Partnering with TMNZ will save time as you will have a team of tax pooling specialists who will work as an extension of your business to provide payment options that allows clients to pay tax how they want and when they want while remaining compliant in the eyes of IRD.
TMNZ’s online system provides a user-friendly portal to speed up transactions and allows communications and a common view of the account and savings with the client.
You’re happy. Client is happy. IRD is happy. Everybody wins.
Successful firms post-BT will be those which have regular conversations with their clients about topics such as tax planning and managing business cashflow.
If you are being proactive and already having those discussions, think of this as another option you can mention to mitigate risk around income tax payments.
Tax pooling continues to grow
Tax pooling has certainly caught on with your peers since it was introduced in 2003 due to the fact it offers ways to reduce exposure to IRD interest and eliminate late payment penalties if taxpayers have missed/underpaid provisional tax or will struggle to make an upcoming payment.
In fact, more than 100 firms across New Zealand have registered with TMNZ this financial year alone. Many employ fewer than 20 staff, a reflection that tax pooling is gaining traction with firms across the board after being primarily used by larger players when the system was first implemented.
It is one way accountants are adding value for their clients. And, as you know, this will continue to be important, especially in the post-BT world of online self-service.
To find out more about the TMNZ Partner Programme click here.