Missed a payment for non-income tax?
My client has missed their GST/DWT/RWT/FBT payment, can I use funds in the pool to meet this liability?
Yes, if your client has deposit funds in the pool you can use these funds to meet another tax liability however you cannot directly transfer them to the other tax type. This is because tax pooling cannot be used for initial assessments of other tax types outside of provisional or terminal income tax.
To transfer these funds, the standard accepted process is to:
- Set up a transfer of the deposit funds from the tax pool to a future income period with no liability as at their deposit date (or as at the required tax date if this is after the deposit date), and
- Once the funds are processed by IRD you will be able to request or arrange through MyIR the transfer of these funds across to the other liability.
Note: We will require supporting evidence of the other tax liability before the sell can proceed.
My client has deposit funds in the pool that I want to use for another tax type liability, but I want them to earn interest. Can I do this?
Due to the limitations on the use of purchased funds you cannot swap funds forwards and then transfer these funds to a future income period as they will not be accepted by IRD. If the due date for the other tax liability is yet to arrive and you have at least two Fridays between the date you are initiating a transaction and needing to transfer funds, you can:
- Set up a sell of deposit funds with the instruction "Redeposit in Pool". This will enable the original deposit funds to be sold on the next Friday following the sell being submitted, and the proceeds including the net interest earned will be deposited back in to the pool.
- Following this being completed you can then use the new deposit funds to transfer to a future income period to meet the other tax liability. This is only beneficial where the redeposited funds will be available prior to the other tax liability being due.
I only have purchased funds left on my taxpayers account but my client is short of funds and I need them to meet another tax type liability. Is there anyway I can use these funds or do I just have to get them paid back to the client?
The only way purchased funds can be used to assist with meeting another tax liability is to sell the funds. We can make a direct cash payment of the sale proceeds to IRD on the selected processing day (normally the Friday following the transaction being submitted, but will otherwise be the sale date selected on the sell estimate) and have this directed to the tax type and period your client requires.
Note: Sale proceeds are dated as at the transaction date selected. Therefore if the due date of your other tax liability has passed already, the proceeds sent across will not mitigate all interest and penalties which IRD have applied to the account.
If you have a client in this situation please ensure you provide us with your instructions prior to the due date of the other tax. This will help minimise any additional costs the client may incur.