Business & Tax Centre Ltd.

    Business & Tax Centre Ltd, Chartered Accountants, 19 Pembroke Street, HAMILTON, 07 834 0556. For all enquiries please see the contact page.

     

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    BizTax Alert Newsletter

    | Summer 2019|

    Financing business with provisional tax

    There are several options available when it comes to accessing money to invest in your business.

    However, did you know that provisional tax payments are also a source of finance?

    Tax pooling, an option offered by an IRD-approved tax pooling provider such as Tax Management NZ (TMNZ), lets you free up working capital by deferring a tax payment to a later date, without incurring IRD interest of over 8 % and late payment penalties.

    The cost is usually lower than using your business overdraft or an unsecured loan. Approval is guaranteed, and no security is required.

    Who might Tax Finance suit?

    It will suit those who:

    • Are looking for funding that doesn’t affect other lines of credit or who want to keep headroom in their existing lending facilities.

    • Don’t wish to go through the rigmarole of the normal lending process.

    How does Tax Finance work?

    1. You nominate the amount of tax due and the future date you wish to pay, and TMNZ puts a date-stamped tax deposit aside for you in its tax pool account at IRD.

    2. At the agreed upon future date, you pay TMNZ the tax owed plus interest (usually at about 6% pa).

    3. TMNZ arranges for your date-stamped tax pool deposit to be transferred to your IRD account. IRD treats this as if the tax was paid on time once it processes the transfer, eliminating any interest and late payment penalties incurred.

     

    Contact us for more information.