Benjamin Franklin famously said, “nothing in this world can be certain, except death and taxes.” Two hundred years on we’re no closer to disproving his statement. However, as inevitable as they may be, there are some simpler and more convenient means of paying taxes.
Tax Management NZ (TMNZ), an IRD approved tax pooling intermediary are a perfect example of this. They enable tax payers to pay income tax at a time or in a manner that suits your cashflow. Part of this involves avoiding late payment penalties and offering a lower interest cost than the IRD would charge.
Some of our favourite features are:
Flexitax – This is the service that most of our clients utilise. Flexitax is similar to a revolving credit loan for your tax. A booking is made for a certain amount of tax (be it provisional, terminal or GST) for TMNZ to pay IRD for you. You can then make payments to TMNZ for this amount as and when it suits with interest calculated and added to the balance monthly. No IRD penalties apply for the late paid tax. This is useful for:
- Paying missed or underpaid tax payments retrospectively
- Creating instalment arrangements for tax
- Delaying payment of tax obligations (perhaps due to cashflow restrictions)
- Reassessments of tax obligations with IRD
Tax Purchase – One-off payment where you pay the tax owed and TMNZ’s interest in a lump sum. Again, no IRD penalties apply. Useful for:
- Missed or underpaid tax payments you want to settle in one transaction
Tax Finance – Allows you to plan for and move your provisional or terminal tax due dates to a preferable point in the future. TMNZ charge you a fixed interest fee upfront with the balance of your tax due on that agreed upon date in the future.
- You must remember to pay this on the due date though.
Please note, the last date for payment using any TMNZ service is 75 days after your terminal tax due date (20th June for most).
For most of our clients TMNZ is best used as a tool for retrospectively paying missed tax, reversing any penalties and reducing interest charges. However, for some, it can be a useful cash flow management tool, allowing you to shift your tax due dates and temporarily put your capital to better use elsewhere.
All services offered by TMNZ can be utilized through Leech & Partners. Get in contact with one of our directors if you’d like to discuss this.
