Taxpayers with a 31 March balance date will generally have their first provisional tax instalment due on 28 August this year.
In today's economic climate, businesses are exploring methods to preserve their cash reserves and avoid their reliance on their business overdraft by cutting cash costs and deferring payment terms.
If you’re aware of any clients who could benefit from some financial flexibility during this time of year, please get in touch. Here are some advantages of our tax pooling arrangements:
Tax Finance - offers the most economical arrangement
Easy Tax - provides the most flexibility
Tax Purchase - offers a simple and uncomplicated option
"Tax Pooling offers payment terms that are more flexible and in most cases more cost effective than any other funding option in the market."
Tax Purchase - "Most Simple"
“Do nothing now” and purchase the tax credits from us when the funds are available, or when you have certainty over the amount to pay.
Tax Finance - "Most Economical"
Agree the term and pay the interest up front. PwC will arrange the tax deposit into the tax pool and earmark this for your client. When the tax finance arrangement is repaid, the tax deposit in the pool can be transferred to your client's income tax account, reversing interest and late payment penalties.
Easy Tax - "Most Flexible"
Setup an automatic payment to “purchase tax as you go”. You will only be charged interest on any payments that are overdue and this is cheaper than IRD. The interest rate is fixed and you have the option to hold the purchased tax in the pool until you file the return to avoid overpaying to IRD
Tax Deposit
If you have the funds available now, instead of paying directly to IRD you can deposit the payment into the tax pooling intermediary.
The benefits include:
Earn interest on any potential overpayment of tax (IRD credit rate is 4.67% p.a)
Option to take a line of credit and “drawdown” against this tax deposit without incurring interest or penalties (also no line fees) as if you chose Tax Finance to start with
Ability to “back-date” the deposit date to cover any provisional tax arrears
Request deposits in excess of the tax liability to be paid out before the tax return is filed
Refresher Training - Provisional tax, use of money interest & interest concession
Approaching the tax filing season, you might be unsure about whether your clients will be liable for use of money interest or late payment penalties on the underpayment of tax. Are you aware of your clients eligibility to utilise the "lesser of" calculations to defer provisional tax requirements?
Book in a virtual or in person provisional tax training session for your team to learn how you can make use of tax pooling to get the most cost effective outcome for your clients. We can run a one-on-one session to cover the different provisional tax calculation methods, use of money interest implications, interest concession and lesser rules.
