Tax Pooling

We often see poorly managed tax payments hurting our client’s business. If you would like to better manage your business tax obligations, Tax Pooling can provide some attractive solutions. Contact us for a discussion about how Tax Pooling can be used to maximise business cashflow.

How does it work?

Tax pooling is the framework Inland Revenue established to help taxpayers meet their terminal tax and provisional tax obligations. Instead of making tax payments directly to Inland Revenue, Taxpayers can make payments into a tax pool. Once taxpayers know exactly what they need to pay in terminal tax or provisional tax, they transfer this amount out of the tax pool to Inland Revenue. In addition, any surplus amounts can be sold to other taxpayers (typically for a return greater than the Inland Revenue credit interest rate they would otherwise receive).

The Benefits of Tax Pooling

Utilising the flexibility of Tax Pooling can have a handful of benefits for your business, such as:

Deferring tax payments:

When used correctly, Tax Pooling can be thought of as a pre-approved overdraft facility. The funds you put in a Tax Pool can be easily withdrawn to help with cash flow.

Reducing your borrowing costs:

Tax pooling has lower interest rates than Inland Revenue and most other lenders. This benefit of Tax Pooling can help a range of clients with the fluctuating costs of running a business.

Saving on Inland Revenue penalties and UOMI:

If you have underpaid tax, you can save up to 30% on Inland Revenue’s UOMI (use-of-money interest) and penalties by using Tax Pooling. In the case of underpaid tax from prior years, you can purchase back-dated tax with cheaper interest rates and avoid UOMI completely. This is because Tax Pooling allows for far greater flexibility than making payments directly to Inland Revenue.

And increasing the returns on any overpayments:

If you overpay your provisional tax into the tax pool, it can be sold to other buyers for up to double of what Inland Revenue will pay you. This is another instance where Tax Pooling offers more benefits and flexibility to business owners than Inland Revenue.

Ask us about Tax Pooling

If you would like to better manage your business’ cash flow, Tax Pooling can provide some attractive solutions.

Get in touch

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