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Access revolving credit with Deposit Offset

Borrow against your tax deposits to get cash back, while preserving flexibility using Deposit Offset.

Tax Traders exists to provide businesses with cash flow flexibility quickly, easily and at low cost. One of the many ways we can assist is by providing you with credit secured against your deposits in Tax Traders’ tax pool. Think of it as a ‘revolving credit facility for tax’.

How it works

Tax Traders releases your client’s deposited funds less an interest cost, providing them with liquidity now and the option of reinstating these deposits at their provisional tax instalment dates later if needed.

  • Client deposits remain at the tax date they were made.
  • We use those deposits as security to advance cash to your clients at competitive rates.
  • Guaranteed immediate acceptance without the need for financial disclosures.

Example:

A taxpayer from the forestry sector experienced major disruptions in March 2020. They had a March balance date and a profitable 2020. However, with COVID-19 related disruptions come April, the client was now incurring costs in the hundreds of thousands each week.

Because this taxpayer had made their 2020 year provisional tax payments through Tax Traders, the taxpayer was then able to access these tax payments for the business. This provided much needed cash flow along with the ability to reinstate them before June 2021 at a cost of less than 4%. No credit checks were necessary or any information disclosure required, nor was it necessary for them to be forecasting a loss for 2021 to secure these funds because the tax pool framework provided the taxpayer this level of flexibility.

The result for the taxpayer was some much-needed financial headroom that allowed them to stay focussed on keeping their business moving at a crucial juncture where other funding sources were not sufficient or available.

Having flexible options and certainty

You may be aware that Inland Revenue’s new provisions include a temporary tax loss carryback scheme which will allow businesses expecting to make a loss in either the 2019/2020 or 2020/2021 income year to estimate their loss and use this loss to offset any profits in the prior year. This change means that Inland Revenue can refund some or all of the tax already paid in the previous year up to the amount of the tax paid in that period. The catch however is that if a business overclaims the loss carry-back, they will need to repay the shortfall, plus Inland Revenue use of money interest, when the current year’s return is filed. This is a measure designed to prevent people from overclaiming on the carry-back and will inevitably catch some people out.

An alternative that provides greater certainty around cost and access to funds is the Tax Traders Deposit Offset scheme. With Deposit Offset, businesses are not limited to only claiming the amount of the loss or even needing to be in (or expecting) losses, so they have better access to funds and greater flexibility. Businesses can make the most of their cash today and keep their options open at the same time.

Set it up in minutes

A couple of conditions apply, so please liaise with your clients to ensure eligibility. We can arrange suitable options. Note that any release of funds may be subject to AML/CFT identification requirements.