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Tax Pooling
Crowe Horwath Tax Pooling
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TAME YOUR TAX
An Introduction to Tax Pooling: Greater control,
more flexibility and better tax outcomes
Join the Crowe Horwath Tax Pool - the
first of its kind in NZ.
Crowe Horwath has developed a unique
and exclusive tax pooling offering with
Tax Management NZ, ensuring you, as
Crowe Horwath clients, get the following:
- Greater flexibility than paying directly
to IRD with faster refunds of overpaid tax
without having to file a tax return and the
ability to sell or purchase tax.
- Easy transfers of tax between
associated entities as required.
- Increased interest on tax
overpayments: 5.10% rather than
2.63%*.
- Reduced interest on tax
underpayments: 6.69% rather than
9.21 %*.
- The security of having your tax
payments sitting within a tax pool
account at the IRD.
- Personalised service and account
management.
- No registration fees or other charges.
*Interest rates subject to availability.
TMNZ interest rates vary in line with
changes with IRD interest rates.
New Zealand businesses are required
to pay tax throughout the financial year
calculated on an estimation of total annual
profit {based on the previous year's or an
elective estimation of the current year's
tax).
Notwithstanding what is paid above, Inland
Revenue (IRD) assumes that the payment
of current year tax should be made in three
equal instalments. Businesses tell us that
they find it difficult to accurately predict
their income tax liability. If you underpay
or are late paying your provisional tax, you
will be subject to use-of-money-interest
(UOMI) at rates well above your own costs
of funding. You will also receive a low
interest credit with your refund in the event
you overpay. Either way, you lose out on
money.
Tax pooling was introduced by the
New Zealand Government in 2003 to
help taxpayers mitigate the financial
consequences of getting their provisional
tax estimations wrong. T he system allows
taxpayers to hold their tax in a special
account with IRD called a tax pool, and
trade any under or overpayments of
provisional tax with other taxpayers holding
funds in the tax pool.
Taxpayers can significantly reduce their
exposure to UOMI and eliminate late
payment penalties if they have underpaid
their tax (including for amounts identified
by IRD audit) and earn a higher premium
than IRD would pay them if they have
overpaid their tax.
Tax pooling is now a mainstream part
of New Zealand's tax system and is
used by most of New Zealand's top 200
companies, state-owned enterprises, fund
managers, major banks and thousands
of small and medium-sized businesses
to better manage their provisional tax
obligations and mitigate their exposure to
UOMI.
It is a valuable addition to your risk
management strategy. If you experience
income volatility or pay a substantial
amount of provisional tax, we recommend
that you pay your provisional tax through
the Crowe Horwath tax pool.
Talk to one of our advisors
Please contact your local Crowe Horwath
advisor to find out how we can assist you.
Tel 0800 494 569
www.crowehorwath.co.nz
This fact sheet provides general information only, current at the time of production. Any advice in it has been prepared without taking into account your personal
circumstances. You should seek professional advice before acting on any material.
Crowe Horwath (NZ) Limited is a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal
entity. Crowe Horwath (NZ) Limited and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and
specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.