Utilising future tax to create working capital in the real estate industry
Working scenario: Bay Vista Real Estate
The situation
Emma runs a real estate agency in Auckland with 12 agents. The business experiences significant income fluctuations, with summer months (December-March) typically generating 60% of annual revenue.
The challenge
During the 2024-25 tax year, Bay Vista faced:
- peak income during the summer months
- large commission payments to agents in December/ January
- lower winter income but consistent overhead costs
- two of their provisional tax payments due during quieter months
- a preference for flexibility to withdraw funds if new opportunities arose.
The solution
Emma chose a TMNZ solution which allowed her to:
- delay payment of provisional tax due in August until a time when the business was earning revenue
- deposit $180,000 during the peak summer months:
- $100,000 in December
- $80,000 in January
- earn interest on deposited funds
- maintain flexibility to withdraw funds for a new investment opportunity
- ask TMNZ to allocate tax to the correct payment dates once the business’s income tax liability is known.
The results
Emma continued her business growth plans, while she also:
- earned interest on deposits in excess of what her bank was offering
- better matched tax payments to income patterns
- reduced her stress during quieter months
- protected her working capital during winter
- simplified the tax planning process
- created a tax savings discipline for the business
- rested easy knowing no IRD interest or penalties had been incurred.
Going forward, the business can use TMNZ annually as part of growth plans and cashflow strategy.
Your key takeaway
By matching peak periods with future planning, you can earn interest and create a facility to fund business growth when opportunities arise.
For more on how our tax solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Managing uncertainty in tax and costs in the construction instruction
Working scenario: Wilson Construction.
The situation
James operates a commercial construction company in Hamilton with 45 employees. The company experiences significant variations in monthly income based on project completion milestones. If clients pay late, this further stresses cashflow.
The challenge
For the 2024-25 tax year, Wilson Construction faced:
- uncertain provisional tax obligations due to uncertainty on when income will be earned
- a large variation between estimated profit ($1.8M) and actual profit ($2.9M) when a project was delivered ahead of schedule in the 2025 financial year, rather than the 2026 financial year as expected
- cashflow regularly tied up in materials and labour costs
- Inland Revenue’s prescribed instalment dates that were not aligned with project payment schedules.
The solution
James opted to manage their tax payments through TMNZ because:
- TMNZ allowed flexible payment dates throughout the year
- the company could make 20+ smaller payments instead of 3 large instalments
- they made payments after receiving project milestone payments
- there was no need to estimate their annual tax liability upfront
- they could change payment amounts at any time based on actual cashflow.
The company made 24 payments ranging from $15,000 to $45,000. They timed payments to follow major project milestone payments and adjusted payment sizes based on project profitability. The total tax paid was $812,000.
The results
James enjoyed better cashflow management, as well as:
- reduced stress around provisional tax deadlines
- no Use of Money Interest charges or late payment penalties
- maintaining a strong working capital position
- better aligned tax payments with business income patterns
- avoiding drawing on construction bonds or expensive bank facilities.
Your key takeaway
Using TMNZ solutions, and seasonal financial planning, tax obligations can be managed to align with business and project outcomes, not IRD deadlines.
For more on how our tax finance solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Reducing the cost of funds for a dairy farm
Working scenario: Henderson Dairy Farm.
The situation
The Henderson family operates a 650-cow dairy farm in Southland. They recently invested in a new milking shed automation system and expanded their herd, creating irregular cash flow patterns during the upgrade period.
The challenge
In the 2024-25 season, they faced:
- $280,000 investment in automation equipment
- an additional $150,000 for herd expansion
- a provisional tax payment of $165,000 due March 2025
- expected lower income for the next few months, picking up in October
- bank facilities already used for farm improvements
- needing to maintain working capital for winter feed.
The solution
The Henderson’s worked with TMNZ to:
- finance the full $165,000 provisional tax payment
- secure 5.6% interest rate (vs IRD’s 10.88%)
- structure repayment to align with improved monthly income
- use TMNZ’s tax finance solution as an alternative funding source.
The results
The Henderson’s saved approximately $4,950 in interest compared to IRD and bank overdraft rates. They also:
- preserved their working capital for winter feed purchases
- maintained a good standing with existing bank
- protected their new automation investment
- avoided selling stock at suboptimal time
- better aligned provisional tax payments with their income cycle.
Your key takeaway
By creating a long-term plan to address variabilities in cashflow, you can plan ahead and secure lower interest on funds to cover costs.
For more on how our tax solutions can help your business, go here.
*This scenario is a fictional example created to demonstrate how tax management solutions work to meet unique circumstances in a range of industries.
Three ways TMNZ’s tax finance solution has supported NZ business success
Since 2003, TMNZ has helped over 25,000 Kiwi businesses to improve cashflow, through our provisional tax solutions. And in the current market conditions, it’s no surprise that we’re experiencing increased demand from businesses looking to finance their 15 January tax payments. Here we cover three different ways, three different businesses have benefited from financing their tax payments through us.
To find out how tax finance can solve your cashflow challenges this summer, learn more here.
Smarter savings in the hospitality industry
The situation
A local hospitality equipment supplier found themselves in an exciting position. As an importer of specialized restaurant equipment, they noticed a significant shift in currency exchange rates that made their European supplier's products much more affordable than usual.
The challenge
While the timing presented a perfect opportunity to acquire high-quality equipment at reduced prices, the business faced a common dilemma. Their provisional tax payment was due soon, and the funds they had set aside for it were exactly what they needed to secure this advantageous deal. It was a situation many business owners face - having to choose between meeting tax obligations and capitalizing on business opportunities.
The solution
Rather than missing out on the opportunity, the business discovered a practical solution through TMNZ. Their approach was straightforward, they partnered with TMNZ to arrange a deferred payment plan for their provisional tax. They utilised their tax payment funds to purchase the discounted equipment and maintained compliance with Inland Revenue while pursuing business growth.
The Results
The strategy proved successful on multiple fronts, they:
- acquired high-quality equipment at below-market prices
- maintained healthy cashflow despite the significant purchase
- increased their profit margins on future equipment sales
- kept their tax obligations in order without penalties
- and enhanced their competitive position in the market.
Your key takeaway
While many small business owners view tax payments as inflexible deadlines, this case demonstrates how working with TMNZ can help manage tax obligations while seizing time-sensitive business opportunities that enhance profitability.
Scaling up in the transport industry
The situation
A transport business landed a fantastic opportunity - a contract supporting a major infrastructure project that could take their company to the next level.
The challenge
The timing created a cashflow squeeze. While winning the infrastructure contract was a milestone achievement, the business needed to expand their trucking fleet immediately to fulfill the contract requirements. Like many small businesses experiencing growth, they had funds set aside for their provisional tax payment but needed that same cash to fund their expansion.
The solution
The business owner took a strategic approach to managing this opportunity and partnered with TMNZ to defer their tax payment for 12 months. They used their provisional tax funds to purchase an additional truck and started servicing the new contract immediately with their expanded fleet.
The results
This decision generated multiple benefits, where the business:
- secured and began working on the valuable infrastructure contract
- increased their fleet capacity and revenue potential
- generated immediate positive cashflow from the new truck
- maintained good standing with Inland Revenue
- spread their tax payment over a more manageable timeframe.
Your key takeaway
Small business growth often requires making quick decisions when opportunities arise. This case shows how flexible tax payment arrangements can help business owners invest in growth while managing their tax obligations responsibly.
Supporting cashflow over summer in the electronics industry
The situation
A small electronics distribution company faced a common seasonal business challenge. Like many businesses in their industry, they traditionally closed their operations during the Christmas period through mid-January, aligning with their major clients' shutdown periods.
The challenge
The holiday season created multiple financial pressures, like zero revenue during the extended Christmas closure. Staff holiday pay obligations were due during this period, and income tax and GST payments were due on 15 January. The business owner was worried about not being able to fully enjoy their family holiday due to financial stress.
The solution
The business owner took proactive steps to manage their seasonal cashflow, and Connected with TMNZ in December. The owner recognized the recurring nature of their holiday season squeeze, and decided that from now on, they would arrange to defer their 15 January income tax payment until April. This maintained their GST compliance while managing cashflow in a smarter way.
The results
This strategic approach delivered both financial and personal benefits, where the owner:
- balanced their holiday season expenses without depleting cash reserves
- maintained staff satisfaction with timely holiday pay
- shifted tax payments to align with their stronger cashflow period
- enjoyed stress-free family time at the beach
- started the new year in a stronger financial position.
Your key takeaway
Many seasonal businesses face predictable cashflow challenges during holiday periods. This case demonstrates how planning ahead and using flexible tax payment arrangements can help business owners manage their obligations while maintaining work-life balance during crucial family times.
For more on how our tax finance solutions can help your business, go here.
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.
Are you in a tight spot with your company tax?
Fibre Cement Solutions Ltd is a family-run business, owned by Rachel Osborn and Graeme Zimmerman, who bring 25 years of construction industry experience with them. As a leading supplier of fibre cement board in New Zealand, they work with several construction partners across the country and after expanding, they have distribution centres in both Auckland and Christchurch.
A few years into business, Rachel, who managed the finances of Fibre Cement Solutions, found herself in a tight spot. It was the middle of COVID-19, and she hadn’t been advised of their upcoming tax liabilities and deadlines. Like many smaller businesses, especially those in the construction industry, the business was experiencing fluctuating cashflow, despite in their case, fantastic growth. As a result, Rachel found herself struggling to pay the unexpected company tax on time, now facing the risk of hefty penalty from Inland Revenue (IR).
Her new accountant suggested she look into tax pooling and made the introduction to Tax Management New Zealand (TMNZ).
And that’s where TMNZ stepped into help.
TMNZ can work directly with any business (or with their accountant) to find a better solution for provisional tax.
Rachel contacted TMNZ to sign up to their IR-approved service, which gives businesses up to 22 months to pay their company tax without incurring heavy penalties. TMNZ provided Rachel with flexible payment options, charging only a small interest fee for the service, much smaller than IR or bank interest rates. And when her tax payments were made, TMNZ transferred these to IR, as date-stamped payments. Job done.
Rachel's flexible payment plan with TMNZ allowed her to make payments on dates that suited the business’ cashflow, and payment amounts that worked for her budget. This solution allowed the business to stay compliant with IR regulations, avoid fees, and manage tax obligations in a way that better suited the business. Meaning Fibre Cement Solutions could continue to pay staff, meet sales targets and continue to grow.
After her initial positive experience with TMNZ, Rachel now monitors the company's financial position monthly. She loves the option to pay TMNZ instead of Inland Revenue directly, allowing her to reinvest funds into the business for growth. Rachel says:
“If you are ever in a tight spot re paying your company tax like we were, there is an incredible solution that TMNZ offer… It is so flexible and user friendly and keeps you out of trouble with the IRD!”
“The Team at TMNZ are extremely friendly and can explain tax in layman's terms which I really loved. I cannot recommend them highly enough”
To learn more about how TMNZ can help your business manage tax payments and gain cashflow flexibility, contact one of our friendly team members here or speak with your accountant about setting up a flexible cashflow arrangement allowing you to choose when you pay your tax.
Top ten financial benefits of tax pooling for larger businesses
Corporate businesses with June balance dates will be aware of the 28 November provisional tax deadline fast approaching.
So, now’s the perfect time to start thinking about using tax pooling – not just to save on Inland Revenue interest and reduce risk, but also as a strategic financial tool for competitive advantage.
If you’re new to tax pooling, it’s worth knowing that it’s an Inland Revenue approved system to help New Zealand businesses better manage their provisional tax. Tax pooling has been around since 2003 and since then TMNZ has helped over 130,000 taxpayers to save more than $520 million, with our flexible and innovative tax payment solutions.
Essentially, tax pooling turns a fixed tax obligation into a flexible financial instrument, giving your company more control over its tax strategy and cashflow management.
Specifically for larger businesses with complex tax obligations, there are many strategic financial benefits. Here we’ve summarised our top ten positive impacts of tax pooling:
- Cost savings: Large businesses often have significant tax liabilities. Tax pooling can lead to considerable savings on Inland Revenue interest and penalties. Savings for some big New Zealand businesses are in the hundreds of thousands of dollars annually. Plus, businesses can even earn more on any overpaid tax.
- Working capital optimisation: Tax pooling allows businesses to retain large sums of working capital for longer periods, which can be strategically deployed for investments, acquisitions, or other high-return activities.
- Risk management: Large businesses face complex tax risks. Tax pooling can be an effective tool in an overall tax risk management strategy, providing protection against unexpected liabilities, reassessments, and penalties.
- Compliance benefits: Tax pooling can help maintain compliance across complex tax structures and simplify tax management processes.
- Reporting advantages: With tax pooling, businesses can improve financial reporting by providing more predictable tax expenses and potentially enhancing key financial ratios.
- Market considerations: For businesses heavily impacted by fluctuating markets, tax pooling can be beneficial for dealing with interest rate fluctuations, by allowing businesses to lock in rates in advance.
- Tailored arrangements: With a business’s specific tax situation in mind, tax payments can be structured around unique cashflows, rather than Inland Revenue's standard dates. This flexibility gives more control over funds - from earning higher interest on overpayments to accessing funds as a fee-free line of credit or carrying them forward to future years.
- Direct integration: TMNZ is directly integrated with Inland Revenue, providing certainty and security around sensitive tax information.
- Scalability and growth: Tax pooling solutions can scale with a business’s growth and adapt to changing tax landscapes.
- Personal support: Our expert team of Chartered Accountants, tax lawyers and customer success specialists are on hand to provide you with personal support and guidance, when you need it.
Whatever your tax position - whether you're looking to earn more interest on overpayments, need payment flexibility and want to avoid expensive banking facilities - tax pooling offers more control and better financial outcomes than paying IR directly.
Contact our team to discuss how these benefits apply to your business and to develop a tailored arrangement before the upcoming provisional tax deadline.
Reducing risk: 28 October provisional tax
The current market conditions are making it even trickier to work out how much provisional tax to pay, not to mention finding the funds to pay it. That’s why, with 28 October approaching, we’re going to offer some ways to reduce your risk in this uncertain environment.
TMNZ offers options to defer this payment for up to 19 months – without having to worry about any nasty consequence from Inland Revenue (IR). We also look at the pros and cons of the respective options available to calculate your payment.
For taxpayers with a 31 March balance date who file their GST returns every six months, 28 October will be the first of two provisional tax instalments payable for the 2024-25 income year. It is also the first of three instalments payable for those with a 31 May year-end who file their GST returns monthly or every two months. This makes it a major payment date for many businesses in the agricultural sector.
What should you pay?
While working out the liability to the exact cent is far from easy – even at the best of times – it does not change the fact you generally have two options when it comes to calculating your provisional tax payments. They are:
- Pay based on an uplift of an income tax liability from a previous year. This is known as using the standard uplift method.
- Pay based on your current expectation of profitability for the 2024-25 income year.
Paying based on an uplift of a prior year
If you travel down this route, the provisional tax payable for the 2024-25 income year will be based on either:
- Your 2024 income tax liability plus five percent; or
- Your 2023 income tax liability plus 10 percent (if your accountant has not filed your 2024 tax return and does not legally have to do so until 31 March 2025).
The benefit of paying uplift means you will not incur IR interest (UOMI) – from 28 October 2024 if it turns out you have not paid enough provisional tax to satisfy the liability for the year.
Given this is the date which carries the longest exposure to UOMI, sticking with uplift may be a sound insurance policy if you feel a similar result to last year is on the cards or want to play it safe in this uncertain environment to ensure you are not caught short later if business picks up down the track. And besides, if things turn to custard, you can always revise your payment downwards later to account for any overpayment on 28 October once the picture starts to become clearer.
However, the downside of paying on uplift means you may end up making a provisional tax payment that is not reflective of your current earnings (or more than your expected profitability for the year). From a cashflow perspective, that can be problematic as generally you will not be able to get your overpaid tax back from IR until after you have filed your 2024-25 income tax return.
Paying based on forecast profitability
Indeed, there’s no denying many New Zealand businesses have been doing it tough and are forecasting lower profits. As such, you may be considering making a payment on 28 October that is more in line with how you are currently performing – especially if your business earnings have been significantly impacted.
On plus side, you won’t be paying any more provisional tax than you need to if you choose to do this. That will certainly offer a cashflow benefit by allowing you to keep money in your business.
You can always revise payments upward or downward depending on how everything unfolds. However, it means you run the risk of incurring UOMI from 28 October 2024 if you experience a sudden or late upswing in profitability during the backend of the 2024-25 income year and provisional tax paid on this dates turns out to be less than the amount required. That said, there is a way to reduce the interest cost on underpaid tax. More on that shortly.
Do you need to file an estimate with IR to pay less than uplift?
We get this question a lot. You do not need to file an estimate with IRD if you plan on paying provisional tax based on your expected profitability for the 2024-25 income year. There is no legislative requirement to do so. Just make your payment on 28 October as you see fit.
Tax pooling can help if you cannot pay, or it turns out you have not paid enough
No matter the basis you utilise to calculate your 28 October payment, IR-approved TMNZ can offer some assistance, with payment options for taxpayers who:
- Do not or cannot make their payment on the prescribed IR payment date.
- Want to eliminate IR interest and late payment penalties if they underpay their tax.
Pay 28 October provisional tax when it suits you
Where preserving cash is of primary importance, you can use TMNZ to defer an upcoming provisional tax payment for up to 19 months, without facing UOMI and late payment penalties.
TMNZ will make a payment to IR on your behalf on 28 October. You then pay TMNZ later. This can be once the liability for the 2024-25 income year is known or when your cashflow situation improves. The amount owed can also be paid in instalments.
You would have until mid-June 2026 to pay what you owe with Flexitax if you have a 7 April terminal tax date. Check with your accountant if you are unsure what your terminal tax date is. There is some interest to pay to TMNZ – but this is significantly cheaper than IRD’s UOMI rate.
Reduce the cost of underpaid tax
Tax pooling is not just for those who are struggling to pay IR on time.
Where forecasting profitability for the 2024-25 income year is proving challenging or you would simply prefer to make your provisional tax payments based on how your business is performing by reviewing your position at each instalment date, you can rest easy knowing that TMNZ can help in the event you get your payments wrong and wind up with additional tax to pay. That’s because you can use TMNZ to make significant savings on the IR interest cost you face and wipe late payment penalties when you underpay tax.
How? TMNZ lets you apply provisional tax that was originally paid to the tax department on the date(s) it was due against your liability. As such, IR treats it as if you paid on time once it processes this tax pooling transaction. This eliminates any late payment penalties. You have up to 75 days from your terminal tax date for the 2024-25 income year to pay any underpaid provisional tax with TMNZ. It’s a useful option to pull out of your back pocket once you determine your actual position and file your return. The savings TMNZ offers on underpaid tax can be significant.
Speak with your accountant
As always, we recommend you speak with and direct any questions you have about your 28 October provisional tax payment to your accountant. If you don’t have an accountant, check out the directory of firms that TMNZ works alongside. You can filter this list by specialist topic or search for a tax agent in your region.
Tax Finance: An alternative funding source
Growing a business is hard yakka. More specifically, it costs money.
And therein lies a problem for many small business owners: Cashflow. In fact, it’s not a problem. It’s a major problem. According to Xero’s Small Business Insights, New Zealand business sales fell by over 8% for the year ending June 2024.
Now granted, there are several choices available when it comes to accessing funds you need to. A bank loan, overdraft, credit card and an unsecured loan are just some.
But again, it’s not that simple. There can be a few hoops to jump through as part of the approval process and you will likely have to use assets as collateral, often using your personal house (or the house of a shareholder, for example) as security to get a lower cost of funds. If there is no approval or credit review process, then chances are you will be up for double-digit interest rates. Ouch.
However, there is another option. It’s one you probably have not heard about either.
The other option – Tax Finance
Did you know that your provisional tax payments are also a source of finance? Yes, that’s right – provisional tax. That thing many small business owners loathe paying. That thing that places undue pressure on, you guessed it, cashflow.
Allow us to explain.
An IR-approved tax pooling provider such as TMNZ offers a payment option known as Tax Finance. It lets you free up working capital by deferring a provisional tax payment to a later date, without incurring Inland Revenue (IR) interest of 10.91% (as at 7 August 2024) and late payment penalties.
For an upfront finance fee, you can choose a time in the future you wish to pay what you owe. Essentially, this allows you to use the money you have set aside for income tax more productively.
The finance fee or interest you pay to TMNZ is:
- similar to the interest rate charged by a bank for a residential mortgage; and
- tax-deductible.
So, you could also use the money set aside to repay your mortgage earlier, thereby reducing non-deductible interest costs charged by the banks on your personal house. The cost of Tax Finance is cheaper than using your business overdraft or an unsecured loan. Approval is guaranteed. Moreover, you do not have to provide any security.
Even better, if you already have paid tax deposits into the TMNZ tax pool, you can finance them back out while keeping the original tax date. We call this Tax Drawdown.
Altogether, this effectively treats your tax payments with the TMNZ tax pool as a revolving credit facility.
Who might Tax Finance suit?
Tax Finance will suit those who:
- are looking for funding that does not affect other lines of credit or their General Security Agreement with their bank
- want to keep headroom in their existing lending facilities
- do not wish to go through the rigmarole of the normal lending process
- want a fixed interest cost
- feel there is more to gain financially from being able to keep money in their business instead of paying income tax.
How much does Tax Finance cost?
It depends. The finance fee is based on the amount of tax due and the future date you wish to pay.
As mentioned above, the TMNZ finance fees are similar to the home loan mortgage interest rates charged by banks.
For instance, at current rates¹ it only costs $335 to defer a $10,000 provisional tax payment for six months. That works out to be approximately 6.70%pa².
How does Tax Finance work?
Here's how Tax Finance works in a nutshell:
- Ahead of your provisional tax payment date, you tell TMNZ the amount of tax you want to finance, the future date you want to finance that to (e.g., the date you think you may be able to pay the tax amount) and pay the finance fee based on the quote TMNZ provides. TMNZ arranges for a bank to make a payment for you in its tax pool account at IR on the provisional tax date. This payment is date-stamped.
- At the agreed upon future date (known as the maturity date), you have a few options:
- settle the full tax amount by paying TMNZ; or
- roll over the financed amount for another period of time – in this case you can get a quote for a further finance fee to pay based on how long you want to finance for;
- settle part of the financed tax and roll over the remaining part;
- settle only the amount you need (if your actual tax liability has reduced).
- Upon settlement of the financed tax, ownership of the tax deposit made by the bank changes to become owned by you and sits in your tax pooling account with TMNZ. You can then request TMNZ to transfer the tax payment it is holding on your behalf to your IR account to clear your tax liability. Once they’ve processed the transfer, IR treats this tax amount as if the tax was paid on your original provisional tax date. It will also reverse any interest and late payment penalties showing on your account.
In the event you choose the fourth bullet in step 2 above, there is no obligation on you for the remaining financed tax (even if you decide to not settle any of the financed tax). You can simply walk away, no questions asked. Or you can ask us to try and sell the residual unused financed amount for you and earn you some interest return, effectively getting some of your finance fee back.
TMNZ offers a competitive rate for Tax Finance. For more information, get in touch.
¹ At at August 2024
² The published ANZ 6 month residential mortgage rate as at 7 August 2024 is 6.99%pa if you have at least 80% LVR.
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.