A tax pooling company helps clients manage their provisional tax payments effectively. All IRD-approved intermediaries operate under legislation detailed in the Income Tax Act 2007 and Tax Administration Act 1994.

Tax Management New Zealand (TMNZ) was the first to introduce tax pooling in New Zealand — the tax pooling originators. This innovation was not only a first in New Zealand but also globally, revolutionising how taxpayers meet their provisional tax obligations.

A brief timeline:

Penalties before 1987

Before 1987, taxpayers and businesses in New Zealand did not face penalties or accrue interest for late or missed provisional tax payments.

1987 – Introducing the interest rate regime

The introduction of penalties and interest costs in 1987 by Inland Revenue (IR) aimed to encourage compliance and timely tax payments. Consequently, taxpayers were charged high-interest rates on underpayments or late payments but only received low-interest rates on overpayments.

2003 – A brand new system

Tax pooling is introduced as a framework by Inland Revenue in 2003. Under the new system, taxpayers can deposit surplus tax payments into an account, known as a tax pool, administered by IRD-approved tax pooling intermediaries. The intermediary acts as a facilitator, matching the tax shortfall of one taxpayer with the overpaid tax of another. Tax payments made in this way are approved by IRD and treated as a payment made on the date it was paid into the tax pool. 

As a tax pooling intermediary, we collaborate with accountants and businesses to make tax payments easy. Tax pooling with TMNZ helps you meet your income tax obligations and avoid late payment penalties and interest charges. The best part? You receive more benefits and greater flexibility than you would paying Inland Revenue (IR) directly.

By using tax pooling, you can transfer tax payments from the pool if you aren’t able to pay your provisional tax on time. If you were to underpay provisional tax, IR would charge you late payment penalties (LPP) and use of money interest (UOMI).

Tax pooling enables taxpayers to consolidate their provisional tax payments, offsetting underpayments with overpayments within the same pool. Because we’re able to backpay your provisional tax payments in this way, we’re also able to avoid the IR penalties and fees incurred as it is no longer considered a ‘late payment’.