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.
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.
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 Deposits can be withdrawn if your clients need to pull cash back into their business (as opposed to having these payments held at Inland Revenue until the tax return is filed) or used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.
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