Updated: 11 May 2022
Anyone impacted by COVID-19 will now have 183 days after their terminal tax date (or until 30 September 2022, whichever comes first) to settle 2021 income tax arrangements with TMNZ, subject to meeting certain criteria.
Inland Revenue (IR) has announced it has extended the legislative deadline, after recognising the cashflow difficulties some taxpayers face in the wake of the pandemic and the Government’s response to it. There is also relief for taxpayers unable to determine their 2021 tax liability before their tax pooling deadline.
The change means those with a terminal tax date of 7 April 2022 now have until 30 September 2022 to satisfy their tax pooling arrangements for the 2021 tax year. Normally they have just 75 days after their terminal tax date to pay.
For taxpayers with a different terminal tax date, the extension to settle 2021 income tax will apply if their 2021 terminal tax dates fell on or after 17 January 2022. So those with 17 January 2022, 7 February 2022, 7 March 2022 and 7 April 2022 terminal tax dates can request extra time to pay.
TMNZ welcomes IR’s decision, and we were pleased to be engaged in the change process. The decision reflects the impact COVID-19 is having on our clients in relation to settling their 2021 income tax obligations within the required timeframe.
Eligibility criteria when applying to TMNZ
The extension is subject to a taxpayer completing an application form and meeting specific conditions:
- The transfer relates to a contract the taxpayer has with the tax pooling intermediary that is in place on or before 21 June 2022 to purchase tax pooling funds.
- In the period between July 2021 and March 2022 (Affected Period) the taxpayer’s business must have experienced (or for March 2022 be expected to experience) a significant decline in actual (or predicted) revenue related to the impact of COVID-19 which means that in respect of the 2021 tax year the taxpayer was either:
- (a) unable to satisfy their existing commercial contract with a tax pooling intermediary; or
- (b) was, prior to this variation, not able to enter into a commercial contract with a tax pooling intermediary.
- Or, in the Affected Period, the taxpayer has had difficulty finalising their tax return position prior to 31 March 2022 because of circumstances arising either from the imposition of COVID-19 response measures or as a consequence of COVID-19. This could include the impact of a key staff member or advisor having reduced availability, or the financial impact of COVID-19 causing significant disruption to the normal business operations of the taxpayer.
- Any person that wishes to use funds in a tax pooling account to satisfy an obligation for provisional tax or terminal tax for the 2021 income year must provide, or have their tax agent provide on their behalf, their intermediary with a statement in writing confirming the above requirements are met. That the statement must be provided to the intermediary on or before 21 June 2022.
Our recommendation is that you apply for the extension as soon as possible, to avoid undue stress closer to the deadline.
Other important considerations
- The extension deadline will differ slightly for taxpayers with the terminal tax dates 17 January 2022, 7 February 2022 and 7 March 2022. Please be mindful of this when completing the application form.
- A taxpayer’s final payment must be received no later than 183 days past their terminal tax date (or 30 September 2022, whichever comes first) for the 2021 tax year.
- The 30 September cap has been provided by Inland Revenue because the Commissioner’s overriding permissions to create variations to the tax laws ends on this date.
- TMNZ’s interest rates for extension arrangements are the same as they are for other transactions.
The application process with TMNZ
You can find the extension application form on our website, here.
We’ve made it easier for accountants and agents to apply for the extension on behalf of their clients. On the TMNZ Dashboard, just visit the Taxpayer Accounts page and now you can simply select the taxpayer/s you’re applying for – their information will automatically appear on the extension form, saving you time and reducing the risk of manual errors.
As always, if you have any questions, feel free to contact your TMNZ account manager or our customer support team. We’re here to help.
Disclaimer: This article is correct as at 4 April 2022. It is subject to change. TMNZ will update this article as and when it receives new information from IR regarding the extension of the 2021 tax pooling deadline. We encourage readers to check this page regularly.