If you’ve just realised you’ve missed your 15 January provisional tax payment, or you’re staring down a payment you simply can’t make right now, take a breath. You’re not alone, and there are options that can help you avoid penalties and get back on track.
At TMNZ, we work with thousands of New Zealand businesses every year who face the same challenge: provisional tax payments that don’t always line up with cashflow realities. The good news? TMNZ offers practical solutions that can save you money and give you breathing room.
What Happens if You Miss a Tax Payment?
Missing a provisional tax payment in New Zealand triggers a cascade of penalties and interest charges from IRD. Understanding what’s at stake can help you take action before costs spiral.
IRD Late Payment Penalties
IRD applies penalties in stages:
- 1% penalty – charged the day after the due date
- 4% penalty – charged 7 days after the due date (on top of the 1%)
- Use of Money Interest (UOMI) – currently 8.97% per annum (as at 16 January 2026), calculated daily from the day after the due date until paid in full
For example, if you owe $20,000 and miss the due date by two months, you could face approximately $1,000 in penalties alone—before UOMI is added.
First-Time Late Payers: Grace Period
If it’s your first late payment in a two-year period, IRD may offer you a grace period before charging penalties. They’ll notify you of this grace period and your new due date. However, if you don’t pay by the new due date, penalties are charged from the original due date. Don’t rely on this—it’s not guaranteed and only applies once every two years.
Understanding Your Options
How to Check Your Tax Position in myIR
Before you act, check where you stand:
- Log into myIR at ird.govt.nz
- Select your Income Tax account
- Select ‘View’ provisional tax to see your due dates and amounts owing
- Check your ‘Income summary’ for a breakdown of income sources
Your myIR account shows your provisional tax due dates, amounts paid, and any outstanding balances—giving you a clear picture of your obligations.
Comparing Your Options: IRD vs TMNZ vs Bank Finance
IRD Instalment Arrangement
- Set up through myIR to pay debt in weekly, fortnightly, or monthly instalments
- UOMI continues to accrue on the outstanding balance
- Some late payment penalties may be reduced if you set up before the due date
- Your payment is still recorded as ‘late’ with IRD
TMNZ
- IRD treats your tax as paid on time when transferred from the pool
- Eliminates late payment penalties entirely
- Interest rates significantly lower than IRD’s UOMI
- Flexible payment options—pay in instalments, defer, or access deposited funds
- You have 75 days from your terminal tax date to use tax pooling for the tax year
Bank Finance/Overdraft
- May require security or affect your credit facilities
- Interest rates often higher than tax pooling
- Uses up banking headroom you may need for business operations
- Doesn’t eliminate IRD penalties—you’re still paying late
The 75-Day Rule for Tax Pooling
A critical deadline to know: you have 75 days from your terminal tax date to use tax pooling to satisfy your provisional or terminal tax liabilities at backdated effective dates. For a standard 31 March balance date taxpayer with a tax agent, your terminal tax date is typically 7 April—giving you until late June to settle tax pooling for that tax year. Act early to ensure you don’t miss this window.
Let’s look at how three different businesses used TMNZ to navigate missed provisional tax payments.
Scenario 1: The project-based business
Meet the team at Bayside Builders*
Bayside Builders is a residential construction company with several homes due for completion after the January provisional tax date. They knew they’d have the cash to pay tax once the properties were signed off and final payments came through, but they couldn’t tie up working capital in tax when they needed it to finish the builds.
January hit, and the 15th came and went. Materials, subcontractors, and wages had to come first.
How TMNZ helped:
Bayside Builders used TMNZ’s tax financing option to defer their provisional tax payment. This meant they could:
- access financing at rates lower than their bank
- preserve banking headroom for construction costs
- avoid IRD penalties and use of money interest (UOMI)
- repay the tax finance once properties settled and revenue came in.
The result: Bayside Builders maintained the capital they needed to complete their projects, avoided penalties, and kept their banking relationships intact, all while meeting their tax obligations.
Scenario 2: The unexpected cashflow crunch
Meet the Andersons from Clearwater Station*
The Andersons run a sheep and beef farm in the South Island. By January, lamb sales are well underway, and cash is starting to come in. But this year, the farm was still recovering from a tough winter. The cost of carrying stock through the cold months—supplementary feed, animal health, and repairs—had stretched their reserves. When an unexpected dry spell hit and they needed to buy in more feed, the business account couldn’t stretch to cover both farm costs and the 15 January provisional tax payment.
But now they needed short-term access to those funds to keep the farm running.
How TMNZ helped:
Because the Andersons had deposited their tax into TMNZ’s pool, they were able to use the drawdown facility to:
- access their deposited funds for a short period
- bridge the immediate cashflow gap caused by the drought
- repay the funds once livestock sales came through
- avoid IRD penalties and maintain their tax position.
The result: The Andersons got through the drought without compromising their tax compliance or incurring penalties, and their funds were back in place once sales resumed.
Scenario 3: The seasonal business
Meet Jo from Coastal Homewares*
Jo runs a homeware and giftstore that does about 40% of its annual revenue in the lead-up to Christmas. By January, the shop is quiet, but the invoices from stocking up for the holiday rush—placed on 30 and 60-day terms—are all landing at once. Between paying suppliers, clearing staff holiday pay, and managing post-Christmas returns, cash is tight. Missing the 15 January provisional tax payment wasn’t the plan, but it was the reality.
How TMNZ helped:
Rather than facing IRD’s late payment penalties and UOMI, Jo purchased tax through TMNZ’s pool and set up a payment plan that matched her cashflow. This allowed her to:
- pay in flexible instalments spread over several months
- avoid late payment penalties entirely
- pay interest at rates lower than IRD’s UOMI debit rate
- get back on her feet without draining the business account
Because TMNZ had already made the payment to IRD on the original due date, IRD treated Jo’s tax as paid on time when it was transferred to her account.
The result: Jo kept her business running through the quiet months and avoided costly penalties, all while staying fully compliant.
Why This Matters
Missing a provisional tax payment doesn’t have to mean penalties, stress, or a hit to your reputation with IRD. TMNZ gives you options that work with your business reality, not against it.
Here’s what you need to know:
- Avoid penalties: When you purchase tax through TMNZ’s pool, IRD treats it as paid on time. That eliminates late payment penalties.
- Flexible payment options: Pay in instalments, defer to a future date, or access funds you’ve already deposited.
- Lower interest rates: TMNZ’s rates are lower than IRD’s UOMI debit rates and competitive with bank financing.
- Fast turnaround: We can often arrange solutions within days, not weeks.
Frequently Asked Questions
If you miss a provisional tax payment, IRD charges a 1% late payment penalty the day after the due date, followed by an additional 4% penalty seven days later. Use of money interest (UOMI) at 8.97% per annum also accrues daily until the debt is paid. These costs add up quickly, which is why taking action early is important.
Yes. Tax pooling allows you to purchase backdated tax credits that IRD treats as paid on the original due date. This eliminates late payment penalties entirely. TMNZ is an IRD-approved tax pooling intermediary that has helped thousands of New Zealand businesses avoid penalties since 2003.
You have 75 days from your terminal tax date to use tax pooling to cover missed provisional or terminal tax payments for that tax year. For most taxpayers with a 31 March balance date and a tax agent, the terminal tax date is 7 April—so you’d have until approximately late June. The sooner you act, the lower your interest costs.
Tax pooling is an IRD-approved system where provisional tax payments from multiple businesses are held in a pooled account. When one business overpays and another underpays, the overpayment can cover the shortfall. Because funds in the pool are date-stamped, purchasing tax from the pool means IRD treats your payment as made on the original due date—eliminating penalties and reducing interest costs.
Yes. TMNZ (Tax Management New Zealand) pioneered tax pooling in 2003 and is one of six registered tax pooling intermediaries approved by IRD. Tax pooling is fully compliant with New Zealand tax law and is used by thousands of businesses and accountants nationwide.
They’re separate charges. Late payment penalties are fixed percentages (1% immediately, then 4% after seven days) charged as a penalty for missing the due date. UOMI (use of money interest) is interest charged daily at 8.97% per annum on the outstanding tax balance until it’s paid. Both can apply simultaneously, making timely action crucial to minimising costs.
Ready to explore your options?
If you’ve missed your 15 January payment or you’re concerned about upcoming payments, our team can help you understand your options and put together a plan that works for your business. We’re here to make tax easier and help you stay in control of your cashflow, no matter what challenges come your way. Get in touch today.
*These scenarios are fictional examples created to demonstrate how tax payment solutions work to meet unique circumstances in a range of industries.