Getting those final notices right for your clients used to be a real slog. Here are a few hints to use ProvCheck to help you power through the pain.
Hint 1: Use the column filters on “Xero basis”
Knowing what the “Xero Basis” means and using the column filters helps you focus on the taxpayers that need attention. Just right click and select the funnel and you're away.
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Xero basis |
What it means |
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“In credit” |
The taxpayer’s return has been assessed at IR and no liability is owing. No further action is usually required. |
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“No statement”
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These taxpayers typically have had no activity or minimal tax due in recent periods and as such have no IR data per Xero Practice Manager. Therefore, these taxpayers often show as nil balance owing. But keep an eye out for any taxpayers who have re-commenced business. |
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“RIT” |
The taxpayer’s return in Xero Practice Manager has a RIT value, but may or may not yet be assessed at IR. Where the return hasn’t been assessed you’ll typically see a difference between Xero Practice Manager and ProvCheck. (See hint 2) |
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“Other” |
This is for more bespoke situations and typically only relates to a few taxpayers. As such you’ll want to drill down and have a look what “Other” means. |
Hint 2: Examining the differences
Always look at differences between the ProvCheck and the Xero amount. ProvCheck amounts are calculated in such a way to highlight factors you need to be aware of and are not reflected in Xero Practice Manager. Common differences at terminal are:
- Tax pooling positions: The ProvCheck amount will include any deposits or tax pooling arrangements in place. If your client has pooling positions or penalties and interest, use the “Manage tax pooling” button to arrange your transfers and purchases.
- Missed and late payments: Xero Practice Manager calculates tax due on a cumulative year to date basis. However, ProvCheck focusses on the period from after your last provisional tax date to the terminal date. This means ProvCheck will highlight shortfalls and any penalties and interest showing at IR. Selecting the Manage tax pooling button from the detailed view will take you to the taxpayer’s Tax Traders account so you can arrange purchases and save your clients money.
- The return is not assessed at IR: If you know their RIT you can use the combined report forecasting function in Tax Traders portal to identify any shortfalls or penalties or surpluses to sell.
- Non safe-harbour taxpayers: If RIT > $60k then the terminal amount will be backdated to P3 to match when Dr UOMI accrues from. Xero Practice Manager will show the amount due at terminal.
- Penalties and UOMI at IR: The ProvCheck amount excludes any penalties and interest because you can use Tax Traders to clear these. If you decide not to use Tax Traders, you can use the custom amount to include these costs.
- Late filing penalties – ProvCheck ignores late filing penalties, but they are included in Xero Practice Manager amounts. Your client will need to settle these directly with Inland Revenue.
- Transfer timing differences: Sometimes there is a timing difference between when a Tax Traders transfers lands on your clients account IR and when they officially tell us they’ve accepted it. As such you might see both the transfer in the ProvCheck amount and the landed amount.
Hint 3: Don’t forget about surplus balances
The ProvCheck amount doesn’t show any surplus balances your client may have from other tax periods. Clicking on “Manage tax pooling” button will take you through to their Tax Traders account and combined report. After you’ve selected the right RIT for the year, you can include prior period or future period balances when organising your transfers.
If you get stuck, we’re here to help! Call us 0800 829 872 or email team@taxtraders.co.nz.