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Supporting NZ businesses

COVID-19 - how we are helping

Cash flow flexibility is what we are about. It's helpful at the best of times, and necessary for many businesses right now. We are always here to help, now more than ever. We’re in constant conversation with the IRD as we work through the specifics of the Government’s stimulus package with them, and how tax pooling can continue to support New Zealand businesses at this time.

This is a dynamic situation. We'll be working to keep you informed of what the package means for tax pooling and how we can best support you and your clients.

How we can help:

  1. Frequently asked questions – Read >>
  2. feeGuard, complimentary from 18 March – refunds on unrequired finance fees. Read >>
  3. Clients under cash flow pressure? How tax pooling can help; PDF to share. Read >>
  4. Stimulus package – tax pooling is part of the toolkit. Read >>
  5. What next? Engaging with IRD and keeping you informed. Read >>
  6. A message from our Founders – Read >>
  7. Useful Links. Read >>

feeGuard, complimentary from 18 March

This option now bundled with new tax finance arrangements, at no cost.

Delaying an upcoming tax payment is one of the fastest and easiest ways to ease cash flow pressure now.

To further help New Zealand businesses we have made our feeGuard option complimentary, and are bundling it with all delayed payment arrangements from today.

feeGuard refunds the finance fee on any portion of a delayed payment that the taxpayer doesn't need at maturity. If the amount of tax finally needed is over-estimated, your client gets that portion of the up-front fee back. This insurance option has traditionally required you to opt-in at the cost of an additional 0.5% on the finance rate.

From today, all customers have access to that extra peace of mind by default and at no extra cost.

How tax pooling can help

A one-page guide to relieving cash flow pressure with tax pooling.

In the face of rising cash flow pressure for businesses, we’ve summarised the most immediate tax pooling solutions onto one page.

Please feel free to forward this PDF to any of your clients who would benefit from accessing more working capital for their business.
 
How Tax Pooling Can Help (PDF)

Tax Pooling and the Stimulus Package

Tax pooling continues to be the IRD's policy of choice for taxpayers to delay their upcoming provisional tax requirements.

This week's stimulus package is a welcome set of supports, targeted at people and businesses who will be in most need of help. Alongside this, tax pooling remains a key tool to help taxpayers access cash flow flexibility and is not limited by the constraints and criteria within the stimulus package.

What we know as of today

The two key changes for tax and tax pooling are:

  1. The provisional tax threshold has changed from $2,500 to $5,000 and is estimated to impact 95,000 small businesses, allowing them to delay payment of their tax obligation.
  2. Establishment of a new discretion for the Commissioner to waive interest on late tax payments for taxpayers and provide instalment plans under certain, limited circumstances.

The discretion will be available where the taxpayer's ability to pay their tax on time has been significantly adversely affected by the virus. We expect the conditions when the Commissioner might use her discretion to be fairly tight but it’s likely taxpayers will have to prove that:

  1. Their income or revenue has reduced by at least 30% compared to the same month 12 months earlier; and
  2. They have explored other options to support themselves financially, such as talking with their bank about additional finance or re-negotiating other loans/overdrafts.
    NB: Tax Pooling is one of the most accessible options for support under this point.

While the wording does cover provisional tax, the discretion appears to be aimed mostly at monthly payments (i.e. not provisional tax). Tax pooling continues to be the IRD's policy of choice for taxpayers to delay upcoming provisional tax requirements.

Expected decrease in UOMI rates

It is likely that the IRD will decrease their interest rates for both under- and over-payments of tax. Based on the Official Cash Rate being cut to 0.25% this week, we expect that:

  1. The rate IRD pays on overpayments will decrease from 0.81% to 0.00%
  2. The rate IRD charges on underpayments will decrease from 8.35% to approximately 7.00%

We anticipate these new rates will apply from 7 May, and will keep you informed as the details are confirmed.

What next?

We’re in constant conversation with the IRD as we work through the specifics of the policy with them, and how tax pooling can continue to support New Zealand businesses at this time.

This is a dynamic situation. We'll be working to keep you informed of what the package means for tax pooling and how we can best support you and your clients.

Tax Traders has a number of options available to help your clients manage their cash flow and tax payments at this time, including borrowing against your tax deposits, addressing missed tax payments and crafting bespoke solutions for your clients. Please reach out and see what we can do to help your clients at this time.

Call us any time on 0800 829 872
Email us at team@taxtraders.co.nz

Useful Links

  • Beehive - COVID-19: Economic Response Package here.
  • IRD - COVID-19 Business Continuity Package here.
  • Official New Zealand Government COVID-19 links here.
  • New Zealand Trade & Enterprise - Coronavirus here.
  • Ministry for Primary Industries - Coronavirus and the effects on trade here.
  • Ministry of Health - COVID-19 Novel Coronavirus here.