What is tax pooling?
An explanation of tax poolingfrom the tax pooling originators
Tax pooling is all about freedom and flexibility
Instead of paying Inland Revenue directly on a given date, you can pay into the tax pool (of an Inland Revenue-approved intermediary – i.e. us) whenever you like.
When your tax bill arrives, let us know and we’ll transfer the exact amount to Inland Revenue on your behalf. The second we do that, it’ll be considered “tax paid”.
It’s all about balance. Some businesses like to overpay their tax when they have the funds. Because of this, they’re actually helping cover businesses that need a little more flexibility with their tax payment arrangements. We like to think of it as business helping business.
Keep your cash flowing
When it’s time to settle your provisional tax, you can use funds from the tax pool.
And here’s where that balance we spoke about earlier comes into play…
If you’ve overpaid, brilliant. You’ve got another choice to make. Put that credit towards your next payment, sell it off (usually for much higher returns than Inland Revenue will offer), or have it refunded.
If you’ve underpaid, no problem. You can buy a little tax top up. And because that money has already been date stamped as paid on time, you’ll never see another late payment penalty. Not only that, but the interest we charge is up to 30% lower than Inland Revenue’s.
Want to know more? Get in touch and we’ll talk you through it.
A partnership that pays
Inland Revenue approved the use of tax pooling in 2003. Since then they’ve had nothing but good things to say about the benefits this revolutionary system brings to both government and business at tax time.
Today, Inland Revenue manage the registration of tax pooling intermediaries, of which we were the first, and (still are) the largest.
You’re good to go! Tax pooling has been approved for managing voluntary or normal provisional tax payments, reassessments of income tax, and increased obligations of other tax types due to tax audits or voluntary disclosures – like PAYE, GST, FBT, NRWT and Terminal Tax.
What is tax pooling?
A quick explanation from the tax pool originators
Tax pooling has helped thousands of Kiwi business owners save more, while enjoying real cashflow flexibility. Below you’ll find everything you need to know about how our revolutionary system can benefit you and your business.
What is tax pooling?
A quick explanation from the tax pool originators
Tax pooling has helped thousands of Kiwi business owners save more, while enjoying real cashflow flexibility. Below you’ll find everything you need to know about how our revolutionary system can benefit you and your business.
Tax pooling is all about freedom and flexibility
Instead of paying Inland Revenue directly on a given date, you can pay into the tax pool (of an Inland Revenue-approved intermediary – i.e. us) whenever you like.
When your tax bill arrives, let us know and we’ll transfer the exact amount to Inland Revenue on your behalf. The second we do that, it’ll be considered “tax paid”.
It’s all about balance. Some businesses like to overpay their tax when they have the funds. Because of this, they’re actually helping cover businesses that need a little more flexibility with their tax payment arrangements. We like to think of it as business helping business.
Keep your cash flowing
When it’s time to settle your provisional tax, you can use funds from the tax pool.
And here’s where that balance we spoke about earlier comes into play…
If you’ve overpaid, brilliant. You’ve got another choice to make. Put that credit towards your next payment, sell it off (usually for much higher returns than Inland Revenue will offer), or have it refunded.
If you’ve underpaid, no problem. You can buy a little tax top up. And because that money has already been date stamped as paid on time, you’ll never see another late payment penalty. Not only that, but the interest we charge is up to 30% lower than Inland Revenue’s.
Want to know more? Get in touch and we’ll talk you through it.
A partnership that pays
Inland Revenue approved the use of tax pooling in 2003. Since then they’ve had nothing but good things to say about the benefits this revolutionary system brings to both government and business at tax time.
Today, Inland Revenue manage the registration of tax pooling intermediaries, of which we were the first, and (still are) the largest.
You're good to go! Tax pooling has been approved for managing voluntary or normal provisional tax payments, reassessments of income tax, and increased obligations of other tax types due to tax audits or voluntary disclosures - like PAYE, GST, FBT, NRWT and Terminal Tax.
An example of Flexitax
The set up
Let’s say you have a tax bill of $28,000 due on 28 August. You might be thinking an overdraft (at bank interest rates) will help you avoid late payment penalties and Inland Revenue interest.
There’s a better way
It’s called a Flexitax arrangement.
How it works
We’ll make the payment for you, using tax from the pool. This means you’ll be able to pay off your tax over the next 22 months in small, regular payments. Or, if you prefer, in large lump sums (depending on your cashflow).
The benefit
Not only have you avoided late payment penalties, but you’ll also pay interest at a floating rate (which is usually much more competitive than the rates offered by banks).
An example of tax finance
The set up
Let’s say you have a tax bill of $36,000 due on 28 August. You have the money set aside but paying your tax bill now will mean cutting back on necessary costs and slowing down your business growth.
There is a better way
It’s called a tax finance agreement.
How it works
Instead of using that $36,000 to pay your tax right now, you can lock in a fixed interest rate and a set payment date up to 75 days after your terminal tax date. Doing this means your bill is now due next March (when you forecast a better cashflow position). We’ll then calculate the finance fee to this date, which you pay to lock in the rate.
The benefit
Come March, you can pay your tax bill without negatively impacting your cashflow or business. As far as Inland Revenue is concerned, you’ve paid your tax on time, saving yourself from late payment penalties and Inland Revenue interest.
An example of Flexitax
The set up
Let’s say you have a tax bill of $28,000 due on 28 August . You might be thinking an overdraft (at bank interest rates) will help you avoid late payment penalties and IR UOMI.
There’s a better way
It’s called a Flexitax arrangement.
How it works
We’ll make the payment for you, using tax from the pool. This means you’ll be able to pay off your tax over the next 22 months in small, regular payments. Or, if you prefer, in large lump sums (depending on your cashflow).
The benefit
Not only have you avoided late payment penalties, but you’ll also pay interest at a floating rate (which is usually much more competitive than the rates offered by banks).
An example of tax finance
The set up
Let’s say you have a tax bill of $36,000 due on August 28th. You have the money set aside but paying your tax bill now will mean cutting back on necessary costs and slowing down your business growth.
There is a better way
It’s called a tax finance agreement.
How it works
Instead of using that $36,000 to pay your tax right now, you can lock in a fixed interest rate and a set payment date up to 75 days after your terminal tax date. Doing this means your bill is now due next March (when you forecast a better cashflow position). We’ll then calculate the finance fee to this date, which you pay to lock in the rate.
The benefit
Come March, you can pay your tax bill without negatively impacting your cashflow or business. As far as IR is concerned, you’ve paid your tax on time, saving yourself from LPP and IR UOMI.
Contact Us
Want to know more about how tax pooling could help your business?
Our support team (the largest in NZ) have all the answers.
Get in touch with us today.