Question of the Month: May 2025

05 May 2025

Logan Jessop, Clients Solutions Expert

Tax planning isn’t one-size-fits-all. What’s the best approach for your clients this 7 May?

Whether they want to pay later, pay in instalments or pay on time, we have flexible options that help them stay in control of their cash flow.

Provisional tax shouldn’t be a burden. Our solutions give your clients more choice, so they can manage payments in a way that works for them, without having to worry about use-of-money interest (UOMI) and late payment penalties.

Pay later

Your clients can defer their 7 May tax payment with one of two types of flexible payment options:

Interest upfront: Fixed interest is paid when setting up the arrangement, with tax due on an agreed future date. This provides the lowest interest rate available, but comes with limited flexibility as there is no refund of interest on unused tax.

Single payment: One payment that covers tax and interest at a chosen time. It allows flexibility in changing the timing and amount in the future but comes with a slightly higher interest cost.

Combined approach: Given 7 May is the washup payment amount for many of your clients with a March year-end, the amount of tax payable can be more uncertain until the tax position for the year is finalised.

To balance the benefits of both styles of flexible payment, consider an interest-upfront arrangement for the core amount that is certain, with a single payment arrangement for the additional top-up amount that is potentially more variable.

This would provide your client the benefit of a lower interest rate on the committed portion, but with the flexibility to modify the second tranche if required.

Pay in instalments

Both of the options above can be configured with weekly, fortnightly or monthly payments as needed.

If you have any questions, feel free to contact our team and we can discuss specific options for your client.

What if my client wants to pay on time?

Clients paying their 7 May provisional tax on time can deposit their tax with Tax Traders for added flexibility. Deposits can be withdrawn if your clients need to pull cash back into their business (as opposed to having these payments held at Inland Revenue until the tax return is filed) or used as collateral to secure working capital.

If you have any questions, feel free to contact the team at Tax Traders.

Previous questions we've been asked

April 2025

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?

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?