Short on cash to pay upcoming provisional tax? Delay a payment by up to 22 months through financing.
If you know in advance of a provisional tax date that your client is unable to make a deposit or full payment of the tax amount due, or they wish to retain cash in their business, you can set up a finance arrangement for your client through Tax Traders to pay the provisional tax.
When an arrangement is put in place in advance, Tax Traders is able to offer your client a significantly lower interest rate, compared with arranging later, so it is well worth talking to us if your client is looking for some flexibility.
This option is particularly helpful in industries where income is seasonal or for businesses that are growing and therefore need to reinvest cash, allowing cashflow to be managed more effectively throughout the income year.
How does it work?
Your client simply pays the interest up front, and then pays their provisional tax at a maturity date they select up to 22 months later. The provisional tax is held for your client in a Public Trust account at Inland Revenue and is transferred to their Inland Revenue account at maturity, once the provisional tax is paid to Tax Traders.
If your client no longer needs all the tax at the maturity date, there is no break fee, however they will not be eligible for a refund of the interest already paid to us.
Our online tools make it easy to setup an arrangement and make adjustments as you go, where necessary.
Benefits
- Eliminate late payment penalties and minimise debit use of money interest charges.
- Retain working capital in your client’s business.
- Less expensive than entering an arrangement after the fact.
- Easy to set up – no security or financial disclosures are required.
- Guaranteed availability of tax credits.
- At maturity, your client only pays the amount that they need, even if this is less than the principal amount they originally financed.
- Pay the amount at maturity or by instalment.
- No establishment fees or charges.
- Does your client need more time than initially arranged? Extend the maturity date as required, up to 75 days after their terminal tax date. We track this for your client.
Criteria
- All finance arrangements must be completed and the funds transferred to Inland Revenue within 75 days of your client’s terminal tax date.
- Income tax is the only tax type that can be delayed in this manner.