Below you'll find some helpful resources that you can share with your clients to explain the benefits of tax pooling
PDF factsheets
You can email or print these PDFs, written in plain English to help explain tax pooling to any taxpayer clients you manage:
General explainers
For New Zealand clients:
Instead of paying tax directly to Inland Revenue (IR), taxpayers have the option to pay their provisional tax into a tax pool operated by a registered commercial provider such as Tax Traders.
A taxpayer who overpays their provisional tax has the option to sell this excess tax, which can be purchased by another taxpayer who has underpaid their provisional tax. Tax Traders facilitates the transaction between the seller and the buyer at much favourable interest rates compared to IR’s use-of-money interest (UOMI) rates.
Where a taxpayer needs to change the timing of their provisional tax payment obligations to match their cash flow, tax pooling also allows the taxpayer to defer upcoming tax payments to a time in the future that suits them. Rather than being exposed to IR interest and late payment penalties for adopting their preferred payment profile, taxpayers instead pay the lower interest rates offered by tax pooling providers.
The tax pooling framework was established by IR in 2003 to help taxpayers meet their provisional tax obligations. Tax Traders is an IR-approved tax pooling intermediary, and all funds are securely held on trust by the Public Trust, as custodial trustee.
For international clients:
Inland Revenue’s tax pooling system is unique to New Zealand’s tax landscape.
It is Inland Revenue’s way of enabling taxpayers to mitigate their exposure to interest and late payment penalties where payments are made late and provides benefits where tax has been overpaid.
Tax pooling is a service that is provided in conjunction with the private sector by an approved commercial provider such as Tax Traders. It is used by most of New Zealand’s large corporates, many of whom have foreign head offices.
We are happy to put you in touch with existing users should your client have any specific questions.