Everything you need to explain tax pooling to your clients
One page, plain English explanations for taxpayers:
For New Zealand clients:
Instead of paying tax directly to Inland Revenue, taxpayers have the option to pay provisional tax into a tax pool when they have cash available through the year. If a taxpayer has underpaid at the end of the income year, they can purchase tax to settle their tax liability, minimising Inland Revenue late payment penalties and debit use of money interest. If a taxpayer has overpaid tax, they can earn premium interest by selling their excess tax through Tax Traders.
Tax pooling is a legal and respected part of the New Zealand tax system. The framework was established by Inland Revenue in 2003 to help taxpayers meet their provisional tax obligations.
Tax Traders is an Inland Revenue-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 charges where payments are made late, and provide benefits where tax has been overpaid.
It is a service that is provided in conjunction with the private sector by approved tax pooling intermediaries and 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.