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Farm back in the black? Here’s a smarter way to handle provisional tax

 

  • Tax pooling with Tax Traders offers farmers flexibility to match provisional tax payments with actual cash flow, reducing the risk of penalties and easing the pressure of seasonal income swings.
  • Deposits into the tax pool can be adjusted after year-end, allowing farmers to buy or sell tax, minimise interest costs, and even access early refunds or flexible payment plans throughout the year. 
  • Farmers can unlock up to 90% of their tax deposit as working capital through Taxi, providing a fast, low-cost alternative to bank overdrafts, while staying compliant with Inland Revenue.

After a few tough seasons, the tide’s turning for many in the paddock. A bumper end to the 2025 income year is something worth raising a toast to – but it might also mean you’re back in the saddle with paying provisional tax. 

And that can bring its own set of headaches. 

Farming’s never been a straight-line business. Income can be lumpy and unpredictable, shaped by the adverse weather events, global markets and timing of payouts. But Inland Revenue (IR) still expects provisional tax to be paid on fixed dates, whether the cash is there or not. 

That mismatch in timing can force you to borrow, overpay, or risk penalties for underpaying. And when your income comes in big chunks – after harvest, milk payouts or stock sales – it’s frustrating to have tax due months before the money lands. 

 

Deposit into the pool and ease the pressure

 

Tax Traders gives you an IR-approved way to allow tax payments to work with the cash available in your business if you’re gearing up to pay provisional tax for 28 October, 28 November or 15 January.  

 

Instead of paying IR directly, you can deposit your payments into our tax pool account when it suits your cash flow, taking the sting out of income swings associated with seasonal ups and downs. Less guesswork, fewer surprises. 

 

The deposits you make into the Tax Traders tax pool sit in an account at IR and this account is managed by an independent trustee (Public Trust).   

 

This gives you the flexibility to adjust your tax payments after the fact to match your actual profit once your accountant has finalised your year.  

 

If your income ends up higher than expected, you can buy tax from the pool at a lower interest cost compared to IR’s debit interest. This also wipes any late payment penalties.  

If you’ve overpaid, you can sell the extra and earn premium interest above IR credit interest, turning tax into a bit of a financial asset. 

 

And if things get tight during your year, Tax Traders can offer early refunds (without having to file a return) or flexible payment plans – support you may not get from IR without applying or providing your financials.  

 

Need cash? Your tax deposit could lend a hand

 

Deposits made into Tax Traders can also be used as working capital through our sibling company, Taxi. 

You can unlock up to 90% of your tax deposit – with funds in your account the next working day –  to cover things like wages, feed or equipment. It’s a fast, low-cost alternative to big bank overdrafts with no credit checks or paperwork. And the interest rates are around half what you’d pay on an overdraft. 

You stay onside with IR and keep your farm moving, without needing to jump through lending criteria hoops. 

 

Final thoughts

 

If you’re back in profit and looking for a smarter way to handle provisional tax without tying up your cash, Tax Traders has your back. 

Tax pooling is approved by IR and has been part of New Zealand’s tax system for more than 20 years. It’s a practical, proven way to manage tax and keep more in your pocket. 

 

Have a yarn with your accountant ahead of your upcoming provisional tax date or give Tax Traders a bell to see how it could help your farm.

Disclaimer: The information in this article is Tax Traders’ general view, intended to provide enough information to inform you about this topic generally as at the date of the article, rather than comprehensive information for all situations. This article should not be relied upon to make decisions. Tax Traders recommends you seek professional advice as appropriate for your circumstances. Rates are accurate at time of publication and subject to change.