How to manage cashflow over Christmas

Everyone loves the middle of summer and spending time with family and friends over Christmas, but it can be a challenging time of year for many small and medium-sized Kiwi businesses.

According to a poll conducted by the Employers and Manufacturers’ Association, more than half of businesses experience cashflow constraints between January and March.

It’s hardly surprising. The period after Christmas is traditionally slow for many companies, with people away enjoying their holidays. Consumers also tend to reduce spending after the expensive Christmas and New Year period.

Businesses can come under pressure for a number of reasons. Earnings will be down if companies shut over the break, while others will feel the pinch if they have paid bonuses before the end of the year.

Considering these facts, it’s understandable that many businesses struggle to manage cashflow and make provisional tax payments on 15 January every year.

Unfortunately, the Inland Revenue doesn’t factor in these seasonal challenges. It expects payments to be made on time and charges taxpayers late payment penalties of up to 20 percent per annum and use of money interest (UOMI) if tax is not received on the due date.

Your options for managing cashflow

What are the best options for businesses that want to manage cashflow and free-up money over the summer?

Tax pooling is IRD-approved and can be used to defer provisional tax payments to a time that suits the taxpayer without incurring late payment penalties and UOMI.

This method is cheaper than using many traditional forms of finance. Rates at Tax Management NZ (TMNZ) start from below eight percent, and tax pooling doesn’t affect existing lines of credit. Also, no credit checks or security are required.

The full amount of finance doesn’t need to be paid back if less tax is owed than first thought. The finance arrangement can be easily extended as well.

How tax pooling can help

Say you want to defer a $5,000 provisional tax payment for six months. You would pay TMNZ a one-off, tax-deductible interest amount and TMNZ would arrange the $5,000 provisional tax payment on your behalf.

The interest amount is based on the amount of tax financed and the period of maturity, so in this instance, ​it would be roughly $205.

The provisional tax payment is held in an IRD account administered by the Guardian Trust. Guardian Trust instructs the IRD to transfer the tax into your IRD account when you repay the $5,000 principal in six months’ time.

The IRD treats the $5,000 provisional tax as being paid on time once the transfer is processed. It’s that simple.

Ready to ease your seasonal cashflow worries? Get in touch with our team to discuss tax pooling options today.

Find our latest resources on tax pooling and calculating tax using the Standard Uplift method here:

Image: Tax refund

How you can use tax pooling like a savings account

In business, cash is king, and being able to access funds quickly in a crisis can mark the difference between success and failure. In an unpredictable and volatile world, having the ability to access cash during challenging times can be priceless.

Just ask the taxpayers who were able to access provisional tax payments they had deposited in the TMNZ tax pool when COVID-19 brought the world to a standstill.

With tax pooling, companies can easily request refunds of provisional tax payments they have made at the year to date without waiting to file their tax returns. They can receive their refunds within a matter of days.

Tax can be one of the largest expenditure lines for a business, so flexibility is vital.

In this economic climate, it’s far from ideal to have large sums tied up with the IRD.

What if you can’t access the money in an emergency?

What if your profitability projections trend down over the year, meaning you’re likely to overpay?

For taxpayers with a 30 June year-end, the first instalment of provisional tax is due on 28 November. Every business and sole trader should ask themselves the questions above, especially if their work is seasonal or cyclical in nature.

Businesses should also think about the accessibility of their funds if their income is difficult to predict or fluctuates due to factors such as commodity prices, adverse weather events, or the exchange rate.

Accessible tax money

Depositing tax payments into a tax pool can form part of an effective risk management strategy in times of uncertainty.

Look at it like depositing into a savings account with the added benefit of eliminating late payment penalties and IRD interest. You can still access your funds if you need to, you’re covering yourself for tax time and possibly extending your time to pay.

How depositing provisional tax into a tax pool works

Tax pooling operates with the blessing of the New Zealand tax department. TMNZ has been a registered provider of the service since 2003.

Companies deposit their provisional tax payments into a shared pool instead of directly into their own IRD account.

Each payment is date stamped as at the date it is made into the pool (e.g., 28 November). Funds are held in an account at the IRD. This account is managed by an independent trustee, Guardian Trust.

A taxpayer holds their payments in the pool until it instructs TMNZ to transfer their deposits to their own IRD account.

Taxpayers can request a refund from TMNZ of provisional tax deposits held in the pool at any time without having to file their tax return or an estimate with IRD.

Refunds may be subject to meeting anti-money laundering requirements. (Corporate taxpayers also need to be mindful of imputation credit account impacts when requesting a refund of tax they hold in the pool).

A taxpayer typically instructs TMNZ to transfer their tax deposits to their own IRD account once they finalise their tax return and know the amounts required at each instalment date to satisfy their liability for the year.

As the tax being transferred from the TMNZ tax pool to a taxpayer’s IRD account has been date stamped to when it was originally paid into the pool, IRD recognises it as if the taxpayer paid the whole amount on time.

This remits any IRD interest and late payment penalties showing on the taxpayer’s account.

Access previously paid funds

If you’re short on cash, tax pooling also allows you to temporarily withdraw deposits you hold in our pool.

You can access the amount of provisional tax funds you have deposited (minus an upfront interest cost). You also have the option to restore your deposit at the original deposit date once your cashflow situation has improved.

Buy some time

When preserving cashflow is high on the agenda, you can use a tax pool to defer upcoming provisional tax payments to a date in the future without incurring late payment penalties.

For example, someone with a 7 April terminal tax date could have up to 75 days from that date to settle their provisional tax.

Earn more interest if you’ve overpaid

If you have surplus tax remaining in the pool once you have transferred money to the IRD to satisfy your liability, you can earn interest above the IRD’s credit interest rate by selling the excess tax to other pool members that have underpaid for the year or have received a notice of reassessment from the IRD.

Please note that this is subject to market demand.

The purchasing taxpayer can reduce the interest cost faced on their underpayment significantly when applying this tax against their liability. This also eliminates any late payment penalties.

Overpayers earn more interest while fellow taxpayers pay less. Everyone’s a winner!

Find out more

To learn more about managing your provisional tax, check out our tax finance guide and cashflow management tips for businesses.

Alternatively, please get in touch with our friendly support team if you have any questions. We’re always happy to help.


Manage IRD exposure with corporate tax pooling

With the 28 November and 15 January provisional tax dates fast approaching, now’s the perfect time to talk to larger clients about the benefits of TMNZ corporate tax pooling.

Tax pooling is an Inland Revenue-approved system to help New Zealand businesses manage their provisional tax. Instead of paying the IRD directly, taxpayers can purchase overpaid tax from other tax pool members and pay into the tax pool when it suits them.

As some businesses overpay tax when they have funds to spare, they help to cover other taxpayers that need a bit more time to meet their obligations. We like to think of it as businesses helping businesses.

TMNZ is proud to be New Zealand’s original tax pool, pioneering the concept in 2003. We haven’t looked back since, helping large businesses, SMEs, and sole traders with tax management.

With tax pooling, businesses that can’t meet their provisional tax liabilities can purchase tax from those that have overpaid. This is charged at a lower interest rate than the IRD’s use of money interest charges, and companies also avoid late payment penalties.

There are advantages on both sides of a tax pool. Companies that have overpaid into our pool can also earn more interest on their surplus tax than if they had paid the IRD directly.

Clients that experience volatility or pay substantial amounts of provisional tax (eg: more than $100,000 at each date) can reduce their exposure to use of money interest by paying provisional tax into the Guardian Trust/TMNZ tax pool account at Inland Revenue (IRD) rather than directly into their IRD account.

In summary, here are all of the ways corporate tax pooling is great for large companies:

  • Companies earn more interest on surplus tax than they would if they overpaid the IRD.
  • Tax can be purchased if businesses have underpaid income tax.
  • Tax can be swapped across provisional tax dates to reduce exposure to use of money interest.
  • Overpaid tax can be refunded within three to five days — without filing a return.
  • Businesses can access TMNZ’s in-house expertise for corporate tax pooling advice on how to optimise their provisional tax payments.
  • Money is deposited in the TMNZ tax pooling account at IRD.

What’s more, by using the TMNZ tax pool, you and your clients are also helping to give back to New Zealand. All our profit is invested in the Whakatupu Aotearoa Foundation, supporting social and environmental causes.

Contact us today to find out how TMNZ tax pooling can help your clients.

Accountant planning

Five top tips for paying 28 August provisional tax

Are you due to pay 28 August provisional tax?

For many businesses, this will be their first instalment of provisional tax for the 2024 tax year. It’s important to stump up what you owe on this date. Inland Revenue (IR) won’t hesitate to charge steep interest and late payment penalties if you don’t.

If you’re a business owner or operator, here are five useful tips to ensure you’re ready to pay 28 August provisional tax. For agents, you may also wish to share these tips with your clients to help them prepare.

1. Assess your cashflow

Now’s the time to look at the money coming in and going out of your business.

Cast your eyes over your accounts receivable report to see which customers owe you money. If required, ask them if they can sort their bill earlier. Conversely, see if you can buy more time if you owe suppliers money.

If cashflow is tight or you have a better use for the money, keep reading. There’s an option that lets you pay 28 August provisional tax when it suits you.

2. Be aware of the changes 

If you’re a safe harbour taxpayer, be aware that despite the rule changes, IR will still charge LPPs at each payment date. You can find out more about the changes here.

3. Know your methods to calculate 28 August provisional tax

It’s important you are aware of the different methods available to calculate your provisional tax payments. For more information about the provisional tax methods available to you, see our Provisional Tax Guide.

4. Consider using tax pooling

An IR-approved tax pooling intermediary such as Tax Management NZ can assist if cashflow is tight. Working with them allows you to pay 28 August provisional tax at a time and in a manner that suits you, without incurring late payment penalties. You can defer the full payment to a date in the future or pay off what’s due in instalments.

Paying via TMNZ also means significant savings on Inland Revenue use of money interest.

TMNZ holds date-stamped tax for you in its IR account. You pay TMNZ at the agreed future date or as and when it suits your cashflow.

5. If in doubt, consult a professional

Do you have any questions about 28 August provisional tax? Seek the advice of an accountant or tax advisor. They can determine the best provisional tax calculation for your business and help you manage your payments and cashflow.

If you wish to learn more about the provisional tax payment flexibility TMNZ offers businesses, email or phone 0800 829 888.

Information in this article is correct as at 17/8/22. You should consult with your tax advisor concerning all tax matters. Read our Terms and conditions.

Tax pooling tips: Using the Due Date on myIR statements may needlessly expose you to UOMI

Here we discuss how TMNZ can help you to avoid interest charges with payments at P3.

Unfortunately we're seeing many clients buying tax at the wrong dates.  We believe this is caused by the confusing way Inland Revenue displays the Residual Income Tax liability on the myIR statements.  If a taxpayer doesn’t meet the safe harbour threshold of less than $60,000 RIT for the relevant tax year, paying tax at terminal tax date will cost you Inland Revenue Use of Money Interest (UOMI).

Why is this?

  • Inland Revenue myIR transaction detail statements show the tax due split on what amounts are liable for late payment penalties and what amounts are not. 
  • As late payment penalties are charged on the lessor of the standard uplift amounts and RIT/3 for all provisional tax dates, they will usually show two amounts for the P3 date.  The standard uplift amount will be shown as due at P3, and the balance of current year RIT will be shown as due at the Terminal Tax date. 
  • However, what is not clear on myIR is that use of money interest will be is charged on the combined P3 total, from P3 to the date the tax is paid.
  • So those that are not transferring the combined total at P3 but transferring the amount at the terminal tax date, will incur interest from the P3 date

How can I stop this?

When transferring or purchasing tax from the TMNZ tax pool, you should be doing this for the combined P3 amount at the P3 date.  This will mean you avoid interest charges.

Find out more by reading our detailed explanation here or contacting our national support team.

Disclaimer: This article is correct as at 19 April 2022. It is subject to change. TMNZ will update this article as and when it receives new information from IR. We encourage readers to check this page regularly.

Inland Revenue extends tax pooling deadline for COVID-19 impacted taxpayers 

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 using the link in the left hand menu of the Dashboard 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.

Tech for good: how TMNZ and innovation partners are making life easier for clients and helping the planet

TMNZ clients will benefit from a significantly simplified Inland Revenue data connectivity for the first time. We discuss how it will help, the innovative tech companies involved, and the broader benefits it will bring. 

The goal of every good business is to make a positive impact on clients, communities and the environment. As a purpose-led organisation, TMNZ strives to make a difference every day. We’re always looking at new ideas to improve our services and meet customer needs. The latest change marks a major milestone to make Inland Revenue (IR) data connectivity available to all. 

In years gone by, accountants and agents have had to deal with multiple systems to access accurate IR data for their clients. The process is often laborious and time-consuming, forcing people to access various platforms and spreadsheets to find the information they need.  

That’s set to change. TMNZ has been hard at work integrating its systems with Inland Revenue and technology partners, to provide agents with a seamless way of obtaining data sharing consent from taxpayers. Following the integration, tax agents can easily obtain consents and access IR data, all without leaving our platform. 

“We’ve been building on the great relationships with Inland Revenue, and technology partners, APS and GoodSign. We’ve worked closely together to deliver this real-time integration without locking people into other platforms they don’t need. We’re thrilled with the result, which allows accountants and tax agents to save time and get on with their work,” says Eric Troebner, TMNZ Chief Technology Officer.  

We’ve created a simple and easy IR integration system.  

With TMNZ, clients can integrate IR data on our systems without signing up to third-party software. You won’t have to go through several steps to get the integration done anymore — it’s ready at the click of a button. We have taken things one step further, streamlining the requirements from IR to ensure taxpayers only share their data with trusted parties. 

Integration is easy to set up. Previously, accountants had to follow a manual process to ask IR for permission to share taxpayer data and subsequently obtain that permission through letters, updated T&Cs, and other correspondence in a time-consuming chain. We have partnered with GoodSign to remove this obstacle. 

  • Once a tax agent authenticates their client list through MyIR, a standardised digital consent form can be sent to the taxpayers of their choice.  
  • The taxpayer signs digitally, and IR integration is instantly turned on.  This saves agents considerable time and cuts down on repetitive admin work. By using an innovative digital consent process, we can ensure that the right permissions are in place. The entire process is automated and delivered through APS for the integration and New Zealand company GoodSign.  

“Whenever TMNZ reach out regarding a project, we know it’s going to strengthen the user experience for our community and it’s been a pleasure collaborating on another successful initiative with the TMNZ team. Congratulations to TMNZ and GoodSign on this project and on their inspiring contribution towards improving the New Zealand environment and ultimately helping tackle global warming.” says Phillip Yarr, APS Head of Product Management.  

We invest 100% of our profits in Whakatupu Aotearoa Foundation to help the environment and community. We’re also proud to partner with companies that help the planet and our communities to maximise the positive impact we have as a business. 

GoodSign, an environmentally-conscious eSignature provider, will handle all the digital documents and is fully integrated with our platform. No sign-ups are required, and there are no hidden costs for our clients or their customers. 

For every 100 documents sent through GoodSign, the company plants 20 trees. We expect thousands of letters will be sent through GoodSign, meaning a better outcome for the environment and tangible climate action. 

“It’s great to be working with TMNZ to help simplify the tax data integration and compliance process for businesses throughout Aotearoa. But it doesn’t stop there - our partnership is also about driving positive change for the environment using GoodSign’s innovative eSignature solution,” says John Ballinger, GoodSign co-founder (and Chief Tree Planting Officer).  

“We’re proud to invest 20% of all sales to fund tree planting to help curb global warming. TMNZ and the Whakatupu Aotearoa Foundation are also focused on tackling the climate crisis, and together, we can make more of an impact.” 

TMNZ is delighted to offer this new service to clients, available to all firms immediately — and use the power of tech for good.  

Contact our support team to take advantage of the easiest IR integration on the market.

Chief Technology Officer
Eric Troebner, TMNZ Chief Technology Officer
John Ballinger, GoodSign Co-founder

Payment options for 15 January provisional tax

One of the challenges of paying provisional tax in times of economic uncertainty is making a payment that is both appropriate and does not negatively impact your cashflow.

Tax is one of the largest expenditure lines for a business, so you want to get it right.

You don’t want to overpay, because that’s money sitting at Inland Revenue (IRD) that you could be utilising in your business. Conversely, you don’t want to underpay because you run the risk of facing IRD interest of seven percent and late payment penalties from the date of your underpayment.

Tax pooling offers a safety net if you cannot make your 15 January payment on time or accurately forecast your payment due to the impact of COVID-19.

It's a service that offers benefits not available to those who pay IRD directly, at no downside.

Pay provisional tax when it suits you

The Christmas-early New Year period is often a challenging time. After all, it is a four-week break from business as usual as things slow down.

For someone looking to manage cashflow, tax pooling lets you pay your 15 January provisional tax when it suits you.

Acceptance is guaranteed, and no security is required.

As an IRD-approved tax pooling provider, Tax Management NZ (TMNZ) can be used to pay your tax on the actual date it is due (e.g. 15 January 2022).

You then pay TMNZ as soon as cash is available and IRD recognises it as if the money was paid on time by you.

There are a couple of ways to pay.

You can finance your provisional tax payment. This sees you pay a fixed interest cost upfront and then the core tax amount at an agreed date in the future.

Alternatively, you can enter an instalment arrangement. Under this payment plan, interest is recalculated on the core tax amount owing at the end of each month.

The instalment arrangement offers flexibility in the sense you can pay as and when it suits your cashflow.

All tax pooling arrangements eliminate late payment penalties. The interest payable is significantly cheaper than the seven percent IRD charges if you fail to pay on time.  

Pay what you think, top up later

Most taxpayers tend to base their provisional tax on a 105 percent uplift of the previous year’s liability.

However, the current economic climate may have forced some in highly impacted sectors to revise expectations around profitability for the 2021-22 income year to the point where making payments based on the calculation above is no longer appropriate.

Others simply may be facing difficulty forecasting their liability due to the uncertainty of COVID-19. As such, they may want to keep cash close at hand in case things change suddenly.

Now there is some good news.

You do not need to pay provisional tax on 15 January based on uplift, nor do you have to file an estimate to pay less than uplift.

Instead you can pay provisional tax based on your forecast expectations of profitability for the year at the time.

Don't worry if, once you determine the liability for the 2021-22 income year, it transpires that you have underpaid. You can purchase any additional tax you owe on 15 January 2022 from TMNZ.

This can be done at a cost that is less than IR’s debit interest rate. It also eliminates any late payment penalties incurred.

That's because the tax you are purchasing from TMNZ was paid to IRD on the date it was originally due.

You pay the core tax plus TMNZ's interest cost when you make your payment to TMNZ. TMNZ then applies the date-stamped tax sitting in its IRD account against your liability.  

IRD will treat it is if you paid on 15 January 2022 once it processes this transaction. The remits any late payment penalties showing on your account.

Please contact us if you have any questions about tax pooling.

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.