Tax Traders and the benefits of tax pooling
With inflation rising, coupled with COVID supply chain issues affecting business, you might find things are a bit tight. Provisional tax payments can be tricky to get right and tax pooling is one way to alleviate the burden.
Tax pooling is legal in New Zealand, and was established by Inland Revenue (IRD) in 2001. It's designed to help small and medium businesses meet their provisional tax requirements, and allows you to pay provisional tax when it suits your business’ cash flow, as well as reducing your tax liability risk.
The idea is simple, you, as the business taxpayer, pay your provisional tax into a ‘pool’ rather than paying it directly to the IRD. When you know what you need to pay in provisional tax, you then transfer this out of the pool. There's then the option to sell any extra to others (at a higher rate), or if you're left a bit short, you can buy off someone else.
We work closely with Tax Traders who are an IRD-approved service. Using a tax pooling service also helps to eliminate late payment penalties charged by the IRD.
If you are keen to know more about tax pooling and how it could help your business, please get in touch with your Gunson McLean accountant. We can help you decide if this is right for you, and offer advice around managing your tax payments and cash flow.
To discuss all your account matters please call us on 09 438 1001
