Get more flexibility and retain greater control of your tax payments.
Retain control of tax payments by depositing
The benefits of tax pooling extend well beyond saving on interest costs. By making all your provisional tax payments through a tax pool, your clients retain a level of control over how their tax payments are managed that is not available by paying Inland Revenue directly. By having your clients’ funds in a tax pool, they have ultimate flexibility to speed up, slow down, or refund their tax payments.
How does it work?
Deposits are held in the tax pool and can be transferred to Inland Revenue whenever it suits your client.
If your client has deposited funds under the standard uplift into the tax pool and you find that their actual RIT is lower than what was paid under the standard uplift, your client can sell or swap the extent of any excess amount(s) paid, earning premium interest through Tax Traders.
By depositing into the tax pool on a certain date, you are locking in the tax at this date. This means it can be transferred across to Inland Revenue at the date of deposit and reduce interest exposure when/if it is transferred across.
If your client has paid the right amount, or more than enough into the tax pool at the correct dates, the tax deposits can be quickly and easily transferred through to their Inland Revenue account at no cost. If it turns out your client’s tax has been underpaid for the income year, deposits in the pool can be swapped to minimise any shortfall before purchasing the difference.
If your client needs their deposited funds back in cash, they can sell their deposits through the pool (earning premium interest). These funds are then paid into their bank account subject to any Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) checks as required.
Your clients can also use our Deposit Offset facility to access credit secured against their tax deposits if they need working capital back in their business. Any funds accessed in this way will need to be repaid prior to 75 days after your client’s terminal tax date for that income year if they are needed to meet a tax liability for that income year. For more information, refer to Access revolving credit with Deposit Offset.
Benefits
- Online account to manage tax balances any time.
- Smooth tax payments across the financial year.
- Receive premium interest on surplus tax.
- Fast refunds when your client wants them, even during the income year with the ability to reinstate payments if necessary.
- Avoid late payment penalties and reduce debit use of money interest costs on underpaid or late paid tax.
- No minimum deposit amount.
- Pay up until 10pm on provisional tax payment date.
- Payments lodged automatically with Inland Revenue.
- No need for same-day cleared payments.
- No account fees or set-up costs.
- Associated entities included in a single account.
Deposits with another tax pool?
It is easy to transfer deposits from another tax pool to Tax Traders’ tax pool, within 48 hours, retaining all historical data so your clients can benefit from all that only Tax Traders can offer. Contact one of our specialist team for assistance.
Criteria
- Deposit payments must be made into the Tax Traders deposit account (see details below).
- Any changes to payments must be completed and transferred to Inland Revenue within 75 days of your client’s terminal tax date.
- The deposit process is designed for income tax. In emergencies, funds paid into a tax pool can be applied to other tax types subject to certain criteria. If you would like to find out more about this, please contact one of our specialist team.
Do it all online in just a few minutes
Deposits of any amount can be made at any time into our deposit account, as long as it has the right references (as below). These payments will hold the date of deposit within the tax pool.
If you desire a Deposit Notice, which has the desired amount as well as the correct payment details, then within your client dashboard, select Manage Tax > Deposit Instructions (the last option on the list).
Ensure the taxpayer displayed is correct, as well as the balance date and tax date as expected (For a custom date, please select the green ''Switch to custom dates'' option). You are then able to enter an amount to be deposited in the pool. Once the information showing is as expected, you can either click ''Email'' to email to an account associated with the taxpayer or ''Download Deposit Notice'', to directly download the notification.
Please note that the creation of a deposit notice does not put in place a deposit arrangement, the money is only counted as being deposited in the pool once it arrives in our account.
FAQs
Do I need to notify Tax Traders if my client is depositing tax into the Tax Traders tax pool?
No, but your client must include their taxpayer name and Inland Revenue number as a reference on the payment so we can recognise it in our system. Our system automatically sweeps payments made to the deposit account into the Public Trust tax pooling account at Inland Revenue each night. To track your client’s entitlement online, you need to have an account with us and have your client added as a taxpayer on your client dashboard.
When do my client's deposits need to be transferred to Inland Revenue by?
Deposits paid into the tax pool are not subject to any time restriction for the taxpayer who holds the deposit, or any companies sharing >66% common ownership.
But for any amounts your client has purchased or swapped (or if the deposits are to meet a tax payment), these amounts need to be transferred within 75 days after their terminal tax date (amounts being transferred to a related entity will also be subject to this time limit).
If deposits are to be transferred to a closed income year, we will ask for evidence of outstanding liability at IR, in order to meet our AML obligations.
Can my client’s deposits be used for non-income tax payments?
Yes, because they are your client’s own funds, your client can use them to cover non-income tax payments where the deposit has been made prior to when the non-income tax payment was due. No time limit applies to this. Your client can then purchase back their tax through Tax Traders to cover any income tax shortfall (this purchase would need to be completed within 75 days of your client’s terminal tax date). There is a process to follow when transferring for non-income tax payments. Please contact one of our specialist team to discuss your client’s requirements.
Can I transfer my client’s deposits out of the tax pool to another taxpayer’s income tax account at Inland Revenue?
Yes, provided your client and the recipient taxpayer are ‘related entities’ and that this is done within 75 days of the recipient taxpayer’s terminal tax date.
Can I transfer my client’s deposits out of the pool to another taxpayer’s account at Inland Revenue for non-income tax?
Yes, provided the recipient taxpayer is a member of the same wholly owned group as your client, as at and from the date of deposit, and the date they are transferring the tax to is not earlier than the date of the deposit.
Can I transfer my client’s deposits from the tax pool to my client’s income tax account at Inland Revenue if they have not filed a tax return yet?
Yes you can, if there is an expected liability and it is prior to the filing date. Inland Revenue no longer requires your client to have filed a return before transferring tax from a tax pool to their income tax account. Once this is done however, any tax pooling benefits and flexibility with respect to the transferred funds will be lost.
I made a mistake on the transfer instruction, what can I do?
Tax Traders advise transfer requests to Inland Revenue weekly on a Friday. If you have made a mistake and we have not yet advised the transfer to Inland Revenue, please contact us to request the necessary correction. Once the transfer has been advised to Inland Revenue, any request for correction will need to be made directly to Inland Revenue through your client’s MyIR account.
Are there any fees for depositing tax?
No, there are no fees for depositing or transferring tax.
Is there a minimum deposit amount?
No, there is no minimum deposit amount.
How do I know my client’s funds will be safe?
All payments and refunds are made to and from bank accounts owned by Public Trust, who act as custodial trustee on your client’s behalf in relation to all client funds. Tax Traders has no authority on these accounts. Inland Revenue has also acknowledged Tax Traders has no authority to instruct Inland Revenue in relation to the Inland Revenue tax pool account. All instructions in relation to client funds and provisional tax payments must be authorised by Public Trust.
Public Trust is one of New Zealand’s largest trustee organisations and a Crown entity – their independence is guaranteed under the Public Trust Act 2001. We engaged Public Trust because they are Government owned and are known for their independent and reliable service.
Will Inland Revenue still send payment reminders if my client makes tax payments to the Tax Traders’ tax pool?
Yes. We do advise Inland Revenue of all tax pool users and Inland Revenue’s system is able to suppress some, but not all, payment reminders. Because tax pool payments do not show in your client’s Inland Revenue account until your request to transfer them to their income tax account has been processed, any statements that Inland Revenue issue in the interim will show nil payments, and may have interest and late payment penalties recorded.
Provided you transfer amounts from the pool to exactly match any payments required under the return filed for or by your client, your client’s final statement from Inland Revenue will show their payment as being made on time and any interest and/or late payment penalty charges will be removed.
Can my client get their deposits refunded?
Yes, your client can get their deposits refunded within three to four days. The tax pooling industry is governed by AML/CFT laws so for us to pay out cash, we would need your client to complete the relevant identification forms and requirements. In many cases, these checks can be done online. If your client has made a refund request and we need AML/CFT identification completed, one of our specialist team will be in touch with you.