Tax pooling: Provisional tax payment flexibility
JZR Accountants & Consultants is pleased to announce a partnership with Tax Management NZ that will enable our clients to pay provisional tax when it suits them, not when IRD says so.
Having to pay on dates set by the taxman can be problematic for some as these do not always align with when a taxpayer earns their income, nor do they recognise the state of their cashflow.
If a taxpayer fails to pay on time, IRD charges interest (currently 8.35 percent) and late payment penalties.
As an IRD-approved provider of a service called tax pooling – which has been operating in New Zealand since 2003 – Tax Management NZ remedies this problem by offering JZR’s clients more payment flexibility, at a reduced interest cost and without having to worry late payment penalties.
We feel tax pooling will help clients who wish to manage their cashflow or want to free up working capital.
How does it work?
Your account manager at JZR Accountants & Consultants can help you to access tax pooling via Tax Management NZ, who makes payments into its account at IRD on every provisional tax date on behalf of taxpayers wanting the option to pay an upcoming payment in instalments or at a time that suits them.
These payments are date stamped as at the provisional tax date on which they are made (for example, 28 August 2019).
Taxpayers then can deposit funds into JZR Accountants & Consultants trust bank account, after which we can forward this payment onto Tax Management NZ through one of two products: Flexitax® and Tax Finance.
Flexitax® enables a taxpayer to pay off what they owe as and when it suits their cashflow, with interest being recalculated on the core tax still owing at the end of each month.
With Tax Finance, a taxpayer pays a fixed interest cost upfront because they are agreeing to pay the full tax amount at a future date of their choosing. The upfront interest cost is based on the amount of tax required and when the taxpayer wishes to pay.
Whatever payment plan is used, Tax Management NZ will transfer the tax the taxpayer requires from its tax pool to the taxpayer’s own IRD account upon receiving payments.
As the tax they are transferring to a taxpayer’s IRD account has been paid and date stamped as at the original due date, IRD treats it as if the taxpayer paid their provisional tax on time when it processes this transfer. This eliminates any IRD interest and late payment penalties incurred.
“by offering taxpayers more payment flexibility, at a reduced interest cost and without having to worry late payment penalties.”
Tax types tax pooling can assist with
Tax pooling can help JZR’s clients to make provisional or terminal tax payments for the current tax year or one just completed.
It can also assist with historic income tax as well as other tax types such as GST, PAYE, FBT RWT and NRWT in situations when IRD issues a notice of reassessment.
Please do not hesitate to get in touch with us if you wish to know more about how JZR Accountants & Consultants can help you with tax pooling.
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