Frequently asked questions
How does Tax Management NZ help me manage my cashflow?
Tax Management NZ lets you pay upcoming provisional tax payments in a manner or at a time that suits you, without having to worry about IRD late payment penalties.
Unlike IRD, which charges interest of 8.22 percent if you don’t pay on the dates it prescribes, Tax Management NZ charges an interest cost which is much fairer (up to 30 percent cheaper) to do so.
It offers two ways – Flexitax and Tax Finance – that can help manage upcoming provisional tax payments and cashflow depending on how you want to pay.
How does Flexitax work?
Flexitax will suit those who wish to pay provisional tax in instalments.
There are no set amounts or payment dates – you pay what you can and when it suits your cashflow, provided you do so within the legal deadline (see below).
Under Flexitax, Tax Management NZ’s interest is recalculated on the core tax owing each month.
How does Tax Finance work?
Tax Finance lets you defer the full provisional tax payment to a time in the future that better suits your business.
You pay a fixed, upfront finance fee and choose the date when you would like to pay.
The finance fee is based on the amount of tax due and how long you are deferring your payment.
When must I pay my Flexitax or Tax Finance arrangement with Tax Management NZ?
You have up to 75 days past your terminal tax date for the tax year the arrangement relates to pay what you owe with Flexitax or Tax Finance.
Is the service Tax Management NZ provides legal?
Yes, TMNZ is a registered tax pooling provider with IRD that operates under legislation set out in the Income Tax Act 2007 and Tax Administration Act 1994.
Are the payments I make to Tax Management NZ secure?
Yes, all payments made to Tax Management NZ are made into bank accounts overseen by an independent trustee, Guardian Trust.
With more than 125 years’ experience in New Zealand, Guardian Trust oversees Tax Management NZ’s tax pool account at IRD in which payments are held. They authorise all payments and tax refunds, as well as transfers to taxpayer accounts.
At no stage does Tax Management NZ have any contact with, or access to, your payments.
How is Tax Management NZ able to reduce IRD interest costs and eliminate late payment penalties?
Tax Management NZ pays tax into its tax pool account at IRD on each provisional tax date and these payments are date-stamped.
Upon receiving your payment, TMNZ arranges for the tax amount at the tax date you require to be transferred from its tax pool account to your IRD account.
IRD treats this as if it was paid on the original date it was due when it processes this transfer, remitting any interest and late payment penalties incurred.
How long does it take for my payments made to Tax Management NZ to show up in my IRD account once they have been transferred?
Normally payments made to Tax Management NZ will show in your IRD account within three weeks after being transferred from the tax pool.
However, please note this may take longer during the March-June window due to the larger-than- normal volume of transactions that are processed during this time.
MISSED OR UNDERPAID PROVISIONAL TAX
Why should I use Tax Management NZ if I have missed or not paid enough provisional tax for the year?
IRD charges interest of 8.22 percent if you have underpaid or missed a provisional tax payment. Late payment penalties may also apply.
With Tax Management NZ, you can reduce this interest cost by up to 30 percent and eliminate any late payment penalties on the amount owed.
How can I pay the missed or underpaid provisional tax I owe IRD with Tax Management NZ?
Tax Management NZ offers a couple of ways to pay missed or underpaid provisional tax.
One-off payment: You pay the tax you owe and Tax Management NZ’s interest in a lump sum.
Instalments: There are no set amounts or payment dates. You chip away at the amount owed over a longer period, paying what you can and when it suits your cashflow. Tax Management NZ’s interest is recalculated on the core tax owing each month.
A future date: You choose a time that suits you to pay and pay Tax Management NZ’s fixed interest cost upfront. You then pay the tax owed at the agreed upon future date.
Are there any conditions?
Yes, Tax Management NZ can help with missed or underpaid income tax payments for the current tax year or one just completed, provided you are within the legal deadline (see below).
How long do I have to use Tax Management NZ to pay provisional tax if I have missed or underpaid for the year?
You have until 75 days past the terminal tax date for that tax year to which the missed or underpaid provisional tax relates to pay what you owe through Tax Management NZ.
AUDIT OR DISPUTES WITH IRD
Can Tax Management NZ help me pay historic income tax or other tax types?
Yes, in situations where you have received a notice of reassessment from IRD due to an audit or voluntary disclosure, you can use Tax Management NZ to reduce the interest cost by up to 30 percent and eliminate late payment penalties if it is discovered you owe more provisional tax, terminal tax, PAYE, RWT, NRWT, FBT and GST than you initially paid.
The conditions are that the original tax return must’ve been filed and only the difference between the assessed and reassessed amount of tax can be paid through Tax Management NZ.
How long do I have to pay Tax Management NZ if I receive a notice of reassessment from IRD?
You have 60 days from the date the IRD notice of reassessment was issued to pay the additional tax owed through Tax Management NZ.
What is a ‘stop-the-clock’ deposit and when might it be useful?
A ‘stop-the-clock’ deposit is when you pay the core tax plus any IRD interest owed at today’s date into Tax Management NZ’s tax pool account at IRD to stop additional interest from accruing while you go through the disputes or litigation process with IRD (or seek commissioner’s discretion).
It provides a safety net if you are unsuccessful as it means you have a date-stamped tax pool deposit that can be transferred to your IRD account to settle what you owe. IRD will treat the tax as if it was paid at today’s date, regardless of whenever it completes the transfer.
Your ‘stop-the-clock’ deposit can also be refunded within three to five working days if your financial position changes