Question of the Month: April 2025
Hamish MacDonald, Client Solutions Expert
Ever felt lost in a tax jungle? Don’t you wish you had a provisional tax guru at your fingertips?
Don’t worry. We've got just what you need.
In April’s Question of the Month, we look at how our Residual Income Tax Tool can take the guesswork out of finalising 2024 income tax positions, to ensure you deliver the best result for your clients when topping up underpaid income tax.
Without keeping you waiting, here is this month's question.
I have several clients who have underpaid provisional tax for the 2024 tax year and will need to top up with Tax Traders. What’s the most effective way to determine the amounts and dates at which to buy tax?
Sometimes it’s not always clear how Inland Revenue (IR) is calculating use-of-money interest (UOMI) when your client has underpaid provisional tax.
That’s why we recommend using our RIT Tool for year-end, as it significantly reduces guesswork, especially in complex scenarios.
Simply enter the relevant information and the tool will expertly navigate the nuances of tax law contained within the Income Tax Act 2007 and Tax Administration Act 1994, to automatically determine the tax amounts due at each provisional tax date, helping you ensure your clients avoid UOMI and late payment penalties.
Comprehensive calculations
The RIT tool also considers any deposits and payment arrangements (settled or active) your client has with Tax Traders.
It calculates necessary top-ups automatically, allowing you to select the payment option that best suits your client.
Guaranteed accuracy
We stand by the results calculated by the RIT Tool. We're so confident in its integrity that we will take responsibility for the outcomes for our clients.
Want to know more about IR’s debit UOMI rules?
We've put together a basic summary of how IR applies UOMI when provisional tax is underpaid.
We’ve broken down the rules based on the method you have used to calculate your clients’ provisional tax.
What is Question of the Month?
Every month, we answer a question that relates to tax pooling, provisional tax or the leading-edge smart tools we’ve developed to simplify your workflow.
Our aim is to provide you with useful tips or information to help you deliver the best outcome for your clients.
Make sure you check out the answers to some of the previous questions we've answered below.
March 2025
With important cut-off dates for the 2024 tax year approaching, how can I quickly identify which clients need to complete transactions before the legislative deadline?
February 2025
IR is applying a client’s refund towards an underpaid provisional tax instalment for the 2025 tax year. I’m reluctant to switch my client to the estimation method to free up this refund given the potential use-of-money interest implications for them. How can tax pooling assist?
January 2025
A salaried employee received one-off income after selling cryptocurrency without tax being deducted. Will they be exposed to use-of-money interest if they did not pay provisional tax during the 2024 tax year?