How to pay income tax when it suits you, not when IRD tells you to
When cash flow is important or our clients just don’t have the money available for tax we have used Tax Management NZ to help them through. Most clients haven’t heard of this option so I asked TMNZ to do a guest blog for us:
Tax Management NZ (TMNZ) provides an IRD-approved service that allows businesses to choose how and when they pay their provisional and terminal tax for the current tax year or one just completed.
They can also help with voluntary disclosures or IRD audits. Paying through TMNZ eliminates IRD late payment penalties and reduces your interest costs.
Upcoming provisional tax payments
TMNZ provides a couple of payment options to help you manage upcoming income tax payments.
The burden large provisional tax payments can have on your cashflow can be eased by paying off what you owe in flexible instalments. There are no set amounts – you pay what you can, when you can.
If paying an upcoming provisional tax payment in instalments does not suit, you can put in place an arrangement with TMNZ to defer paying the full amount of tax due to a time that suits you.
While this is another way of matching provisional tax payments to your cashflow, it also allows those looking to reinvest in their business to free up working capital.
The upfront finance fee is cheaper than using an overdraft or unsecured loan and does not affect existing lines of credit. No security is required, and approval is guaranteed.
Underpaid or missed income tax payments
If provisional tax has been underpaid, you can settle what you owe through TMNZ to eliminate IRD late payment penalties and reduce interest costs. Underpaid tax can be paid off in one lump sum or instalments.
You have up to 75 days past your terminal tax date to settle your provisional or terminal tax liabilities for the current tax year or one just completed with TMNZ.
Audits and voluntary disclosures
TMNZ can also reduce IRD interest costs and eliminate late payment penalties if you have received a notice of reassessment from IRD due to an audit or voluntary disclosure. They can assist if it is discovered you owe more provisional tax, terminal tax, PAYE, RWT, FBT, NRWT and GST than you initially paid to IRD.
You have 60 days from the date the IRD notice of reassessment was issued to use TMNZ to pay the increased tax liability.
Frequently asked questions
Are the payments I make to TMNZ secure?
Yes, all payments made to TMNZ are made into bank accounts administered by Guardian Trust, which also oversees the TMNZ tax pool account at IRD in which funds are held. At no stage does TMNZ have any contact with, or access to, your tax payments.
Is the tax pooling service provided by TMNZ approved by Inland Revenue (IRD)?
Yes, TMNZ registered with IRD and operates under legislation set out in the Income Tax Act 2007 and Tax Administration Act 1994.
How is TMNZ able to eliminate late payment penalties and reduce interest costs on underpaid or unpaid provisional tax that was due on a date that has passed?
TMNZ has date-stamped tax sitting in its tax pool account at IRD. Whenever you make a payment to TMNZ, it transfers the tax you require from its tax pool account to your IRD account. IRD treats the tax as if it was paid on the date in was originally due once it processes this transfer, eliminating any interest and late payment penalties incurred.
Do not hesitate to give us a call if you want to discuss TMNZ. Alternatively, visit www.tmnz.co.nz for more information