The tax pool combines income tax payments from taxpayers across New Zealand and allows taxpayers to trade those payments to match their needs.
Instead of paying tax directly to Inland Revenue (IR), a taxpayer has the option to pay into a tax pool whenever it suits them.
If they have underpaid tax during and/or at the end of the income year, they can purchase tax to settle their liabilities, minimising late payment penalties and debit use of money interest (UOMI) from IR.
If they have overpaid tax throughout the income year, they can earn premium interest by selling their excess payments to other taxpayers.
Funds deposited into a tax pool remain in the tax pool until the taxpayer directs the funds to be used to purchase tax to settle their liabilities, on-sold to another taxpayer, or refunded.