TMNZ: The ultimate cashflow flexibility tool for your business
In tough economic times, it can be hard for businesses to stay on top of cashflow and juggle their tax liabilities. For companies and sole traders dealing with fluctuating cashflow and provisional tax headaches, there’s an easier way to manage your obligations—tax pooling.
Did you know TMNZ’s tax pool can help you manage your tax by matching your cashflow forecasts with your provisional tax payments? And you can use tax pool deposits as an alternative funding source when cashflow is tight.
How we can help
TMNZ is an Inland Revenue (IR)-approved tax pooling provider, meaning you can use us to pay income tax on your behalf at a time that suits you. We offer greater flexibility over how and when you pay provisional tax.
First, you’ll need to think about your cashflow forecast. If you’re unsure how to put one together, read our cashflow management guide.
Once you’ve got your cashflow projection, we can work together to figure out the best time to pay your provisional tax. From there, all you need to do is tell us your tax amount owed, the date it is due, and how you would like to pay.
When your tax bill arrives, we’ll transfer the amount required to IR on your behalf as a time-stamped payment. IR will treat your tax as if it was paid on time, eliminating the risk of being charged interest or late payment fees. Simple.
A working capital solution
TMNZ’s payments to IR mean you can keep money in your business and use it at the times of the year you’ll need it most. You can top up your payments later into our tax pool at any time.
Tax pooling is a perfect solution for businesses worried about future cashflow and looming obligations. By partnering up with us, you’ll have total control over your tax bill, rather than working around IR’s strict deadlines.
With no more late fees and interest charges from IR to think about, you can get on with running your business. There will be no need to scrape together funds in the middle of holidays or quiet periods to meet IR’s deadlines.
TMNZ can also save you money by avoiding penalties and interest charges if you’ve missed or underpaid tax. We charge much lower interest rates than the penalties imposed by IR if you’re overdue.
We’re a line of credit
Another amazing TMNZ feature is that we can be a line of credit for your business.
If you’ve deposited funds into our tax pool but find yourself short on cash, you can withdraw that money whenever you want to use it as working capital.
If you’ve paid provisional tax into our pool, you’ll have access to a working capital facility up to the value of your deposit. This provides even more flexibility for you and your team to get through a cash crunch and stay on top of debt management.
We can offer much cheaper interest rates than bank loans, overdrafts, or unsecured loans, meaning money withdrawn from our pool is better for you and your business, putting you in a stronger position at the end of the year.
Ready to learn more about the benefits of tax pooling?
Download our guide to Better Cashflow Management for top tips on managing cashflow throughout the financial year.
If you’re ready to take control of your tax and gain access to a valuable line of credit for your business, find out more at by reading our Tax Pooling 101 page to learn more about the full range of benefits of being in our pool.
Then talk to your tax adviser about TMNZ tax pooling to take away your tax management worries.
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, Inland Revenue (IR) doesn’t factor in these seasonal challenges. IR charges taxpayers 5.04% late payment penalties and 10.91% use of money interest (UOMI) if tax is not received on the due date (as at November 2024).
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 IR-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. 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 IR account administered by the Guardian Trust. Guardian Trust instructs the IR to transfer the tax into your IR account when you repay the $5,000 principal in six months’ time.
The IR 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? Learn more about our tax finance options today.
Find our latest resources on tax pooling and calculating tax using the Standard Uplift method here.
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 2025 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 TMNZ can assist if cashflow is tight. Working with us 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, get in touch
Information in this article is correct as at 30/7/24. You should consult with your tax advisor concerning all tax matters. Read our Terms and conditions.
How TMNZ tech takes the pain out of tax
As New Zealand’s first ever tax pool, we’re proud of our long history of innovation. It’s at the heart of everything we do, and we’re always looking for new ways to simplify tax.
Technology has been at the forefront of our efforts, whether it’s rolling out new features for our customers, adding new functionality online, or partnering with forward-thinking digital platforms.
Recently, we’ve rolled out some amazing tools to help our customers and their accountants easily manage income tax.
Discover our top tech solutions to help you take the pain out of tax time, including tools to cut down on admin, share data between platforms, and get instant information on things like tax swaps.
Direct Inland Revenue Integration
TMNZ’s online dashboard is fully integrated with Inland Revenue (IR), meaning taxpayer information held by IR can be seamlessly shared on our platform, to make accountants lives easier.
In the past, accountants had to deal with multiple systems and spreadsheets to find accurate IR information. Integration means this admin work is no longer required.
Inland Revenue and TMNZ systems are directly connected so that key IR information is automatically populated on our dashboard. All relevant IR data, including Residual Income Tax figures, filing dates, and direct IR transactions appear on the TMNZ dashboard once you’ve logged in.
Thanks to IR integration, accountants can save time and reduce admin work. Direct IR integration also removes the risk of manual errors as clients populate information from one platform to another, making the process much more efficient.
IR information is fed into our calculator to help you determine your (or your client’s) tax position as quickly as possible.
Kathleen Payne, Partnerships Director at TMNZ, says:
“Following IR integration, all the data you need for your calculations goes straight onto our dashboard. All you have to do is put in the current year’s position that IR might not know yet, and everything is calculated without further data entry.”
If clients need any assistance with our direct IR integration, then TMNZ's friendly support team is on hand to help. And you can find out more about IR integration here.
Taxlab integration
Our systems are also fully integrated with Taxlab, the cloud-based tax software system designed specifically for New Zealand accountants.
Taxlab integration is easy to set up and use. Once you’ve completed the process, TMNZ transactions will appear on the Taxlab platform. Clients no longer need to use different systems to calculate their tax position.
“Accountants will get a complete picture of all TMNZ transactions sitting against their clients’ tax year,” Kathleen says.
Like IR integration, the setup couldn’t be simpler:
- log in to Taxlab, go to ‘Settings’, and add TMNZ as a connection
- you’ll then be directed to TMNZ to log in and confirm
- from there, you’ll be able to view TMNZ tax pooling information, including a full history of purchases, deposits, transfers, and tax payments.
Integration with Taxlab reduces the time and effort spent sharing information across the two platforms, giving tax agents even more time for their valuable client work.
Group Optimiser
If you’re a busy accountant in public practice looking to manage the tax year for groups of clients, TMNZ’s Group Optimiser tool is tailor-made for you.
This innovative feature enables accountants to calculate the position of several taxpayers and create multiple transactions at once.
Used alongside IR integration, Group Optimiser can make tax calculations even simpler.
Kathleen adds:
“Instead of having to prepare spreadsheets for each member in a group and then decide who has overpaid or underpaid tax, agents can use our calculator to enter a small amount of information. Then, at the click of a button, Group Optimiser calculates how to use the tax across the group in the most effective way.”
Group Optimser is ready and waiting on the TMNZ dashboard. All you need to do is log in.
Upcoming Deadlines
The Upcoming Deadlines function on the TMNZ dashboard is another of our top tech features.
For accountants managing several tax pooling clients, the Upcoming Deadlines feature can be used to track taxpayers ahead of key dates.
Offering total visibility over client tax positions as deadlines approach, the tool suggests prompts and actions to finalise the year.
“It also gives accountants a control list to work through their clients and ensure everything has been finalised,” Kathleen says. “It’s a workflow and control function and will remind advisers about everything they need to do for their clients.”
Automated Tax Swaps
TMNZ’s automated Tax Swaps is our latest dashboard feature, enabling clients to get instant quotes and process swaps below the threshold*.
Tax Swaps allow clients to even out their provisional tax payments if they have overpaid on one date and underpaid on another, saving on IR interest costs.
With our automated Tax Swap service, clients will benefit from faster, more efficient processing
The best part? The Tax Swap function is DIY.
“It’s a self-service system,” Kathleen explains. “If a client knows the swap they want to do, our system will automatically say, ‘Yes, you can do it, and this is the interest you’ll get’. You won’t have to interact with us at TMNZ. You can do-it-yourself.”
“It’s super efficient,” she adds. “Clients will have certainty of the outcome, they’ll know how much interest they’ll have to pay, or what they can earn, in an instant.
“At TMNZ, we’re all about flexibility, and empowering our customers to make decisions at a time that suits them.”
Automated Tax Swaps launched recently, following our pilot with TMNZ's Early Adopter community in April.
Become an Early Adopter
Are you part of TMNZ’s Early Adopter community, who gets first access to all our latest tech features?
Early Adopters enjoy the benefits of our new products and enhancements before anyone else, with support and training to help you make the most of new tools.
As an Early Adopter, you can share feedback and experiences to help us develop the best tech possible for accountants and clients.
“We love working with people to create the best tax solutions possible,” Kathleen adds. “Our Early Adopters are highly motivated, creative people who want to help us get even better.”
If you’re a tech savvy tax pooling user in an accounting firm, become an Early Adopter in a few simple steps:
- login to your dashboard
- Select your firm
- select ‘Early Adopter Programme’, from the left-hand menu
- review and accept the Terms and Conditions presented
- click the ‘Sign up’ button.
To learn more about TMNZ’s latest tech developments, head to our Innovative Tax Technology page or contact our support team today.
*the threshold is subject to change depending on market conditions.
Missed your latest provisional tax payment? How you can find relief
If you own a business, you’re probably familiar with paying provisional tax. Which means you’re also familiar with its inflexibility, and the penalties and interest that accumulate if you miss a provisional tax due date.
The problem with this model is how it affects your cashflow. You need money to pay staff, cover operational expenses, and invest in growth initiatives, yet it’s tied up in saving for tax time. Or worse yet, in shelling out for Inland Revenue (IR) interest and penalties on late payments.
No matter which camp you’re in, there is relief and it’s called tax pooling.
If you own a business, then you can benefit from tax pooling. Let us explain how.
First, what happens if I miss my provisional tax payment?
If you’ve paid taxes late or haven’t paid enough by the provisional tax due date, IR may charge penalties or interest on your unpaid amount as follows:
- A 1% late payment penalty is charged on the day after the due date
- An additional 4% penalty is charged seven days after the due date — including late payment penalties (LPP)
- UOMI may be charged from the day after the due date – UOMI will be charged daily until you have paid your total tax amount, including late payment penalties and any accrued interest.
What is tax pooling?
Tax pooling is unique to Aotearoa, with TMNZ being the first and largest tax pooling business. Essentially it allows tax paying businesses to pool their provisional tax payments in an account held by a registered tax pooling intermediary like TMNZ. This way, we offset one business’ underpayments by another’s overpayments. Think of it as business helping business!
Because we’re able to backpay your unpaid tax, it is no longer considered a ‘late payment.’ Meaning you avoid the IR penalties and fees on any missed tax payments.
With TMNZ, you have the flexibility to make a one-off payment or set up a regular instalment arrangement, giving you up to 13 months to pay your provisional tax. Additionally, if you've missed your terminal tax date, TMNZ can still help reduce interest costs and eliminate late payment penalties.
How about for historic payments from IR reassessment notices?
TMNZ can also assist taxpayers with historic income tax payments and other tax types such as GST and PAYE if you receive a notice of reassessment from IR. You have 60 days from the date the IR issues this notice to use tax pooling.
What’s the catch?
Paying provisional tax through a tax pooling intermediary such as TMNZ lets you pay what you owe at a time in the future that better suits your business, or take advantage of instalments to avoid the provisional tax late payment penalty.
There is some interest to pay – but this is much lower than IR's interest on tax paid late or what you will incur if you use your business overdraft or get an unsecured loan. Tax pooling wipes the late payment penalties.
All you have to do is tell the tax pooling provider the amount of tax that is due and when or how you would like to pay it. They take care of the rest and even notify IR of your arrangement. Easy-peasy.
Save yourself the tax trouble. Find out more.
If you've missed your provisional tax payment or are struggling to meet your tax obligations, you’re not out of luck.
TMNZ can help ease the financial strain of late payment penalties and provide much-needed cashflow relief. Contact your accountant or tax agent and let them know you want to pay your missed or underpaid provisional tax using TMNZ tax pooling. Or get in touch with us directly to explore your options and take control of your tax payments.
Don't let a late payment penalty derail your business. With tax pooling from TMNZ, you can navigate the challenges of tax season with confidence and peace of mind.
Contact our team to take advantage of tax pooling today.
TMNZ Board announces new Chief Executive
TMNZ is thrilled to announce the appointment of Matt Edwards as CEO, effective 1 May 2024.
Matt joins TMNZ following 16 years of strategic leadership and entrepreneurial experience, working in the FinTech sector in the United Kingdom and across Europe.
The appointment signals the next chapter in TMNZ’s journey, as the purpose-led tax pooling originators and market leaders look to help more New Zealand businesses, in exciting new ways.
Board Director and TMNZ Founder Ian Kuperus said:
“We’re delighted to welcome Matt to TMNZ. Matt is extremely well regarded overseas for his senior leadership of people, strategy, technology, innovation and product capability areas. Now our New Zealand business, and our customers, will benefit from this deep experience.”
Matt’s background shows that he is a growth specialist, with a track record of driving businesses forward, developing high-performance teams and bringing transformational change to businesses looking to take the next step.
New CEO Matt said:
“TMNZ has developed an enviable reputation as an industry leader in tax pooling services. I believe the business is primed and ready to take the next step, by changing up how we deliver our current market offering and better serving our customers' needs in a dynamic FinTech world. I am very excited about the opportunity to drive this vision."
The appointment follows news of former CEO Chris Cunniffe retiring from his position in January 2024, but continuing in an advisory capacity to support a smooth leadership transition. The TMNZ Board personally thanked Chris for 12 fantastic years of leadership. The Board also thanked Amanda Thorpe, for guiding the business through the transition period in her role as Acting CEO.
Under Matt’s leadership, TMNZ remains committed to building on its successes and delivering the best client experience, as well as continuing to donate its profits to Whakatupu Aotearoa Foundation for a restored and thriving New Zealand.
For queries please contact TMNZ Brand and Marketing Director at charlotte.tremewan@tmnz.co.nz
Tax Drawdown: Use your tax payments as a line of credit
Every now and then, businesses can encounter cashflow struggles, whether you have overdue invoices or an unexpected bill to pay. When this happens, it’s typical to ask your bank for help. But did you know there’s an easier, cheaper way?
As a TMNZ customer, you can access funds you have paid into our tax pool at any time. You can draw out your deposits as an affordable line of credit without the headache of a loan application, conversation with a bank, or Inland Revenue (IRD) paperwork and still keep your original tax deposit date.
How it works
Imagine your business is suddenly hit with a big cost and you need some quick cash. By getting in touch with TMNZ, you can access the money you’ve already paid into and held in our pool.
You can draw down the funds on a temporary basis, and our flexibility helps you solve a short-term business challenge in a simple, cost-effective way.
TMNZ Tax Drawdown allows you to use your tax payments in the pool as collateral to take out funds at attractive interest rates. You can request money at any time and it will land in your account within three to five business days (provided AML requirements are met).
The benefits
Tax Drawdown puts you in control. You can borrow money for a minimum of four weeks or a maximum of up to 75 days after your terminal tax date. Once you’ve paid us back, we can continue to hold those tax payments in the pool (which will be available for a future drawdown) or transfer the payments to the IRD to meet your tax liability.
Small businesses and larger companies alike can tap into Tax Drawdown, and there’s no limit to how much of your tax deposit you can withdraw.
If your current tax pool doesn’t do drawdowns, fear not. You can transfer your tax pool payments to us and kick-start the process immediately.
While Tax Drawdown is a bit like a line of credit, we don’t charge line fees or establishment fees like the banks.
TMNZ can also offer more competitive interest rates than the banks. Our rates are the same as our finance rates, which are much closer to the cost of a home loan than a small business loan. Interest costs depend on how much money you take out and the duration of your withdrawal and you’re only charged for the period you use the funds.
Kathleen Payne, Director of Strategic Partnerships at TMNZ, says Tax Drawdown can be a business lifeline.
“It’s really useful for businesses that need to make a capital investment, buy stock, or simply position themselves for the rest of the year. People can use our tax pool to their advantage and it’s so easy to do, with interest costs limited to the time they’re using the funds. It’s another working capital option for businesses, particularly in an environment where cashflow is causing a lot of constraints.”
How to use Tax Drawdown
Accessing your money is a painless process. Get in touch with us or ask your tax adviser to call or email our team.
Kathleen says Tax Drawdown applications are “relatively simple” and can be made multiple times a year.
“A small amount of information needs to be provided. We ask how much money you need and how long you need it for. We then work out your interest rate, finalise the terms, and get it signed.”
Kathleen says Tax Drawdown can help businesses and the New Zealand economy by freeing up money for investment and growth.
“If you think about what businesses use the funds for, it’s additional spending in the economy. Tax Drawdown enables people to use money at a reasonable cost to make capital investments, investments in staff, or meet a market challenge.
“All of these things help businesses survive and thrive, and it has a circularity for the whole economy,” she says. “It’s money going back into the business community while helping companies meet their tax liability. So everyone’s a winner.”
In need of flexible, affordable financing? Contact our team to take advantage of Tax Drawdown today.
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 world, having the ability to access cash during challenging times can be priceless.
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 Inland Revenue (IR).
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 these questions, 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 IR 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 IR 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 IR. 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 IR 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 IR.
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 IR 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 IR account has been date stamped to when it was originally paid into the pool, IR recognises it as if the taxpayer paid the whole amount on time.
This remits any IR 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 IR to satisfy your liability, you can earn interest above the IR’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 IR.
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 calculating provisional tax 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 IR exposure with corporate tax pooling
With the 28 November provisional tax date 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 (e.g., 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.
Using the Due Date on myIR statements may needlessly expose you to UOMI
Let's talk about 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 lesser 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 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.
To find out more, get in touch.
Disclaimer: This article is correct as at 19 April 2022. It is subject to change.