Forgot to make a tax payment? Your client can pay outstanding tax at a time that suits their cashflow.
How to purchase a missed payment
If your client has not paid their provisional tax by the due date, they can purchase tax from the Tax Traders tax pool. Purchasing tax from the tax pool will save your client money. It works out to be 35-45% less interest than settling a late payment with IR directly, and it eliminates late payment penalties altogether.
How does it work?
Tax pooling allows your client to purchase another taxpayer’s tax to settle their outstanding taxes with IR. This is a win-win outcome, because the person selling the tax receives more interest than IR's standard credit use of money interest (UOMI) rates. It is a classic example of taxpayers helping other taxpayers for mutual advantage. Tax Traders is an IR-approved tax pooling intermediary and acts like a broker to facilitate this market. Tax Traders has tax available to meet liabilities from the 2006 income year and onwards.
Benefits
- Save 35-45% over IR debit UOMI and eliminate late payment penalties.
- No minimum purchase amount.
- Immediate confirmation of purchase requests.
- Flexible payment options available online to suit your client’s cashflow and business priorities.
- Transactions processed weekly, so there are no long waits.
Criteria
- Tax purchases must be completed and transferred to IR within 75 days of your client’s terminal tax date.
- Income tax is the only tax type that can be purchased for an initial assessment.
- Other tax types can be purchased, but only if your client has had a reassessment from Inland Revenue and the initial return was paid and filed: GST, DWT, RWT, NRWT, PAYE, FBT, ESCT, RSCT. Purchases and transfers must be completed within 60 days of the date of issue of the reassessment for these other tax types. Our online tools will guide you through this.
Do it all online in just a few minutes
On your client dashboard, select Manage Tax > QUICKStart > Purchase a missed payment – and follow the prompts.
FAQs
How long does it take for purchases to appear in my client’s IR account?
We process transfers to IR every Friday. The process of transferring amounts purchased from the tax pool to an IR account will generally be completed within 24 hours. Once complete, these amounts will show up on your client’s income tax statement on their IR account.
The buy tool brings up all tax dates for my clients balance date and period. Do I need to delete the lines I don't need to buy?
No, just enter in the tax amount required on one or more of the tax dates. When you calculate, any blank field will be automatically removed. A rubbish can button is otherwise available at the end of each transaction line to be able to delete a specific line if needed.
I have set up a purchase for my client but it shows today's date for the payment and I don't think I can get them to pay today, can I change this?
If today is a Thursday todays date will appear, as Thursdays are the default payment date selection for our single payment option each week. You can customise the payment date by clicking on the Customise button at the bottom of the single payment option box on your payment details screen and amend this to a suitable payment date for your client.
Do I have to purchase or transfer the exact amount that my client requires?
If it is possible to do so, this is recommended as it will speed up the processing of your purchase or transfer request by IR.
I have set up a purchase invoice but selected for the funds to be transferred out to IR following payment. I have realised no liability exists at IR for the purchase amount yet as the return is not filed. How can I change this setting?
If we have not received any payments as yet on the order this setting can be changed on the transaction. Click on the transaction under transaction details and you should find a grey edit button to the right of the 'Transfer to IR' confirmation in the top summary section of the page. By editing the option to 'No' the funds will be held in the pool following receipt and processing of the clients payments. If the option to edit is not available please contact our team for assistance.
Can I purchase more tax than I think my client needs?
If your client has not yet filed their income tax return for that income year, IR will allow your client’s purchase request, subject to the 75 day tax pooling deadline, but they may contact you to clarify your client’s intentions regarding any surplus or potential surplus. If your client has filed their income tax return and you are purchasing more than what your client is liable for at any provisional tax date, IR will contact you to confirm what your client would like done with the surplus: either have it transferred to an associated taxpayer and/or applied against your client’s future provisional tax requirements.
Can my client purchase tax but leave it in the tax pool until they have more certainty on their tax payable?
Yes, please contact us at the time of ordering your client’s tax so we are aware that they want to do this and can ensure the purchased tax is not transferred out of the pool. You will also need to notify us when your client is ready for the purchased tax to be transferred to their income tax account at IR. These must be transferred no later than 75 days after your client’s terminal tax date, even if IR has allowed an extension to their filing deadline.
Can my client get their money back if they no longer need an amount they purchased?
If your client has opted to hold the purchased funds in the tax pool, they will be able to sell these funds through the pool to get their money back. However, if these funds have already been transferred to IR, it will be up to IR to approve a refund.
Can my client purchase tax at a backdated date for income tax and then transfer them to a non-income tax type?
No. Purchased funds can only be used for income tax unless your client has been issued a notice of reassessment for another tax type from Inland Revenue. For further criteria regarding reassessments, refer to “Purchase for a reassessment” in this toolkit.
What is Tax Traders’ rate for purchasing tax?
Rates vary depending on the amount of tax your client needs and the date of the tax. We show a rate on every quote. You can generate a quote for your client by using our online calculator.
Does Tax Traders have any minimum limits on how much tax can be bought?
No, we do not have any minimum purchase limits.
Can my client pay their tax purchase off in instalments?
Yes, but you must set up an instalment plan for your client to enable them to do this. The payments scheduled in the instalment plan reflect the amount your client is purchasing and the period over which they are paying it off.
Will purchasing tax eliminate a late payment penalty?
In most cases, purchasing tax will eliminate a late payment penalty. Provided your client completes the purchase before the 75 day tax pooling deadline from their terminal tax date, any late payment penalties IR have applied to their account will be eliminated (to the extent the amounts transferred from our tax pool satisfy your client’s missed obligations).
What does the benefit amount represent on a purchase quote?
Our benefit estimates represent the difference between the interest cost of the quote and the amount of UOMI we estimate the client will be exposed to on their account with IR if they settled the core tax amount on the selected settlement date for their purchase. If you opt to include late payment penalties on your estimate, we will also calculate the late payment penalties they are potentially exposed to and will provide a total overall benefit calculation on your purchase estimate.
My client is not exposed to late payment penalties, how can I remove this from my estimate?
Our system allows you to choose whether or not late payment penalty estimate calculations are included within the benefit summary provided. On your tax requirements screen you can tick or untick the LPP box for each applicable tax line. If this tick box is unselected for one or more of the tax dates being requested, we will automatically remove the late payment penalty calculation estimate from the total benefit section on your estimate summary.