Managing business cashflow in uncertain conditions

Looking back at 2021

In 2021 we learnt that emerging risks can quickly disrupt business operations, strategic plans and cashflow. The pandemic, combined with volatile markets and policy changes, put strain on New Zealand businesses. Revenues that were once predictable became unstable and COVID-19 related costs emerged.

The business environment in 2022

So, what can we expect from this year? Looking at economic indications and market conditions right now, the signs say 2022 will be another turbulent year, requiring careful financial management from business leaders.

With Omicron’s arrival in New Zealand, we are facing more restrictions that will impact business operations. The promise of open borders is looking doubtful, and this will put a strain on business looking to hire oversees talent, with labour shortages expected. Closed borders will also impact supply chains and certain industries like tourism, will continue to feel the crunch.

Stock markets are reacting to the impact of Omicron and other challenges, seen in the weak and falling S&P/NZX 50 Index[1]. Some businesses will be further exposed by interest rates rises, inflation expectations and tougher lending restrictions. RBNZ has signalled that lending will get even tighter from here.

For example, the Government’s recent changes to the Credit Contracts and Consumer Finance Act (CCCFA) are making it harder for business owners to access funding from their bank.  The additional information that lenders are requesting, and the security that they require for small business lending means access to working capital can be difficult.

Moving from consumer lending to consumer spending, the data shows that while consumer spending rose in December 2021[2], this was driven by the easing of lockdown restrictions before Christmas, and things will be different in 2022 due to Omicron-related restrictions.

With all of this considered, it’s not surprising that business sentiment is tracking downwards[3].

Managing cashflow through volatility

As 2022 shapes up to be another challenging and uncertain year, businesses will need to consider all the options for managing cashflow.

Tax pooling is a great solution for tax paying businesses which are uncertain about their cash flow.  Businesses can use Tax Management NZ (TMNZ) to keep money in their business or defer tax payments to a time that suits them, rather than the prescribed provisional tax dates from Inland Revenue.

The TMNZ tax pool can help businesses to reduce their exposure to interest if income tax has been miscalculated and tax pool deposits can be used as a line of credit if more help is needed. Also, if a business has missed or underpaid a provisional tax payment, TMNZ can help to save money by avoiding penalties and Use of Money Interest.

For businesses looking for working capital to pay their provisional tax, TMNZ can help – without any need for security and at interest rates well below traditional lenders. Businesses that have paid their provisional tax into the TMNZ tax pool have access to a working capital facility up to the value of their deposits.  This can be drawn upon when short-term working capital is required. 

For more guidance on cashflow management and the benefits of tax pooling, click here.

[1] S&P/NZX 50 Index, January 2022:

[2] ANZ-Roy Morgan Consumer Confidence, December 2021:

[3] ANZ Business Outlook Survey, December 2021:

Image: Queenstown

Survey indicates property market cooling due to confusion

News release: Chartered Accountants Australia and New Zealand and Tax Management New Zealand

26 November 2021

A survey of chartered accountants and tax agents has revealed that incoming legislation intended to help cool New Zealand’s over-heated housing market is already having a major effect on investors – but largely because of confusion and lack of detail rather than clear policy. 

The annual survey, jointly run by Chartered Accountants Australia and New Zealand (CA ANZ) and Tax Management New Zealand (TMNZ), sought the views of 361 accountants in public practice, on recent tax policy developments. 

Among the findings, the survey revealed that 70% of respondents have already seen clients change or voice their intention to change their residential property investment behaviours due to ongoing changes to the extended bright-line test, and proposed changes to deny interest deductions.

CA ANZ NZ Tax Leader John Cuthbertson said that further results from the survey show to key factors in play; the complexity of the proposed rules, and uncertainty as the details could change before the legislation is enacted in March 2022, despite the bright-line and denial of interest deductions coming into play from earlier this year.

“The survey suggests that the housing market has been given a policy placebo, in the form of legislation that is influencing behaviour before it is fully developed and enacted.”

“Residential property purchasers and investors typically react to the specific detail of legislation. However, in this case the market appears to be reacting to the complexity of the proposed legislations carveouts and inconsistencies, and the fact that it won’t know exactly what is in place until March 2022, despite it being backdated to capture activity in 2021.”

“To be fair, the Government’s aim was to cool down the overheated housing market, which is causing a range of economic and social issues, but we’re not sure this is the best way to do it.”

The survey shows that over 21 per cent of the respondents, or 1 in 5, feel ‘not at all confident’ about advising clients on the proposed new build interest limitation rules, and over 65 per cent of participants felt the phase out and denial of interest deductions would be somewhat or extremely difficult to comply with.  

Similarly, almost 50% of respondents said they were either somewhat confident, or not at all confident on advising on the new build bright-line test. 

“Because this policy hasn’t been developed in line with the generic tax policy process (GTPP), there’s a much higher chance of unintended consequences and collateral damage.  The survey shows a considerable lack of confidence in how the legislation will work, and that will likely result in non-compliance and issues around who is captured and who isn’t.”

“It’s important to note that the level of complexity encountered will depend on the number of properties owned, banking arrangements in place and the mix of interest limitation rules and concessions in play,” added Mr Cuthbertson. 

TMNZ Chief Executive Chris Cunniffe said the survey provides a good indication of how the proposed rules would be rolled out. 

“In their current complex form, there’s likely to be a lot of variability in compliance with these laws. Especially as not everyone has a tax agent or accountant helping them.” 

“While the extension of the bright line test to 10 years might land well for most mum and dad property owners, the denial of interest deductions and how that relates to new builds is likely to be misunderstood.”

“There’s opportunity for Government to provide greater clarity on the law changes and simplify certain aspects to help owners and accountants alike.”

New Survey Shows Inland Revenue Helpful, But Hindered

Press Release: Chartered Accountants Australia and New Zealand and Tax Management New Zealand

24 November 2021

Helpful, but hindered is the overarching finding in a new survey digging into public practice accountants’ experiences with Inland Revenue (IR).

Conducted by Chartered Accountants Australia and New Zealand and Tax Management New Zealand, the survey of 361 members in public practice asked a range of questions about the timeliness of IR’s service, the quality of interaction, and the business support on offer.

“Over 80 per cent of those surveyed rated their agent account manager interactions positively over the last 12 months, which Inland Revenue should be pleased with,” said CA ANZ NZ Tax Leader John Cuthbertson.

“The flipside is that it is taking much longer for Inland Revenue to resolve queries. The number of public practitioners who say it’s taking more than 6 days to resolve their queries has risen from 5 per cent of respondents, to 47 per cent.”

Despite this, accountants and tax agents are positive about not only their interactions with account managers, but also the support measures that Inland Revenue has administered.

“Accountants and agents across New Zealand are telling us that the tax support provided by Inland Revenue has been as effective this year, as it was last year,” said Tax Management New Zealand Chief Executive, Chris Cunniffe.

“It’s been another turbulent year for businesses, and the tax relief and support measures have made a positive difference. It’s just that our survey shows it can take a while to get through to Inland Revenue, and to have queries resolved and assistance locked in.”

The appreciation of Inland Revenue’s support was illustrated by 85 per cent of participants reporting that they had clients who utilised the remission of interest and penalties for late payment of provisional tax due to COVID.

Additionally, over 71 per cent of participants have found it easy or not difficult, to enter into or assist clients with an instalment arrangement in the past 12 months. This covers all types of tax, including GST, PAYE and FBT, not just provisional tax.

The increased level of scrutiny and information required to access COVID support was also felt by survey respondents.

“Approximately half the survey respondents said that accessing COVID support was harder than in 2020. That’s not surprising, given the public’s desire for more scrutiny about who received support, and the declarations becoming more stringent during this year’s lockdowns,” concluded Mr Cuthbertson.

Chris Cunniffe, CEO TMNZ

Celebrating 10 years with TMNZ

CEO Chris Cunniffe shares his reflections

Chris Cunniffe, CEO TMNZ

I have recently marked 10 years with TMNZ, and as I passed that milestone I have taken time to reflect on what has changed over the decade. 

I joined TMNZ in September 2011 after 15 years working in large corporates with Air New Zealand and Bank of New Zealand.  There were just seven TMNZ staff at the time.  Ten years ago much of the tax pool offering was geared towards larger taxpayers, with a lot of time being spent assisting corporates which had come out on the wrong side of an Inland Revenue audit.

In 2013 we set a challenging strategy to deliver sustained growth, by increasing the number of clients we would assist and automating the way we would deliver our service to those clients. Three strategy cycles later, we have grown to a company of nearly 50 employees managing three times more tax in the pool, and helping hundreds of thousands of taxpayers pay tax on their terms. 

Our commitment to growth and development remains unwavering, but now there is an even greater purpose behind the work that we do.  When TMNZ’s owners, Ian and Wendy Kuperus, made the decision to commit all profits of TMNZ to philanthropic causes, I knew I absolutely had to keep working for this business. It‘s a unique opportunity to be able to lead a successful company which has purpose of dedicating 100% of profits to Whakatupu Aotearoa Foundation, to help restore New Zealand’s communities and the environment. 

I think the next stage of the TMNZ journey is going to be the most exciting yet. 



Image: IRD contacting clients

IRD agrees to stop contacting clients directly

Image: IRD contacting clients

Accountants have a fundamental role to play in the tax system and IRD is putting measures in place to limit direct contact with their clients.

These are the words of IRD commissioner Naomi Ferguson.

Her announcement – made during her address at the annual Chartered Accountants Australia and New Zealand (CA ANZ) Tax Conference in Auckland – comes as a response to concerns raised in a survey by tax agents that they are being pushed out and undermined.

The commissioner was quick to allay those fears, reminding accountants of the important role they play in maintaining the trust, confidence and integrity of the tax system. She added they will continue to do so as IRD forges ahead with Business Transformation.

In terms of the unintended issues stemming from IRD contacting clients directly, she said more than 70 processes involving interactions with taxpayers have been adjusted since issues were brought to its attention.

IRD will also invert the system so that the default position ensures tax agents will receive correspondence for any taxpayers to which they are linked.

A very timely announcement

Her announcement is welcome news for many accountants.

It is also timely, coming directly after TMNZ chief executive Chris Cunniffe presented at the conference the results of the annual Satisfaction with IR Survey.

The survey – commissioned by TMNZ and CA ANZ, and in its ninth year – found that nearly three-quarters of members working in public practice had clients who were contacted directly by IRD in the past six months. This is up from 66 percent the previous year.

Agents were very vocal in voicing their displeasure about this.

As a result of IRD bypassing them and contacting more of their clients directly, they were starting to feel undermined. Some were also expressing concern that the department is deliberately designing the tax system to phase them out.

Feedback in the survey is consistent with what TMNZ and CA ANZ are hearing from accountants at their respective roadshows.

However, following the IRD commissioner’s announcement, tax agents will now be able to rest easy.

Satisfaction with IR Survey: Other findings

The Satisfaction with IR Survey asks CA ANZ members in
public practice and business for their views on Business Transformation and
interactions with IRD.

Below are some of the other key findings from this year’s survey.

Members’ experiences contacting IRD

Chartered accountants’ overall satisfaction with IRD dropped for the fourth year running. It now sits at 66 percent, down sharply from 78 percent in 2018.

The decline is steepest among accountants in public practice.

That's due to the difficulty they face when trying to find the right person to speak to when phoning IRD (declined 11 percentage points) and the accuracy of the department’s processing (declined 15 percentage points).

The challenges experienced in these areas can be attributable to the release of phase three of Business Transformation earlier this year.

Polarising views on Business Transformation phase three

Members in public practice were less favourable about this
release compared to members in the corporate, public and not-for-profit sectors
– a reflection of their experiences of phase one where they were again the
hardest hit.

Difficulty finding things on the website, the speed of IRD’s responses and processing times, and getting known errors fixed are the source of their frustration with phase three. 

But those who feel the release has gone well believe the website is easy to use and contains all the information they require in one place.

Forty percent of members believe IRD is prepared to face the
challenges of the next 12 months but feel these could be better addressed with
more honest communication, staff training and wider engagement with taxpayers,
software providers and accountants.

Members say that general information in tax information bulletins, rulings, brochures and tax alerts have all improved this year.

TMNZ and CA ANZ share the full survey results with IRD. You can view them here.

About the Satisfaction with IR Survey

TMNZ and CA ANZ have been conducting the Satisfaction with IR Survey since 2011.