FAQ
A FEW COMMONLY ASKED QUESTIONS AND ANSWERS.

  • Getting started

    Why should I use a tax pool?

    Because if you pay provisional tax you will know how hard it is to get it right and tax pooling is one of the few options Inland Revenue has provided to taxpayers to lessen the burden. Whether you have overpaid or underpaid your provisional tax, tax pooling can give you a better deal. And, if cash flow is important, you can use financing to pay the tax when it suits you, while ensuring Inland Revenue gets their payments on time. If you end up financing too much we'll give you a full credit on the portion of the fee that you overpaid.

    Do I need an online account to use this service?

    Yes you do but there is no charge for setting up an account. To get you started we just need some simple details and it only takes 60 seconds to set up.

    Is there a cost for using the service?

    No. There are no establishment fees or other administrative charges for using this service. We earn our income by making a margin on buy, sell and finance transactions between tax pool members.

  • Safety / legality / governance

    How do I know my funds will be safe?

    Public Trust acts as custodial trustee in relation to all client funds. We engaged Public Trust because they are Government owned and are known for their independent and reliable service. All payments and refunds are made to and from accounts owned by Public Trust who acts as custodial trustee on your behalf. Tax Traders has no authority on these accounts. The provisional tax payments you make to the tax pool trust account are also held by Public Trust on your behalf and Inland Revenue has acknowledged Tax Traders has no authority to instruct Inland Revenue in relation to this account. All instructions in relation to client funds and provisional tax payments must be authorised by Public Trust.

    Is this legal?

    Yes. Tax Pooling operates as a partnership between the public and private sectors. Inland Revenue put the framework in place to assist taxpayers and the private sector (through intermediaries like Tax Traders) facilitates the settlements between taxpayers. As the one who established the framework, Inland Revenue only allows intermediaries they approve to offer this service. Tax Traders is Inland Revenue approved.

    Who is behind Tax Traders?

    Tax Traders is owned by Josh Taylor, Nicki Taylor, Mike Shaw and Robin Oliver. The Company is also supported by a top flight advisory board which meets several times a year to provide strategic direction and governance to the Company.

    Is the tax pooling system unique to New Zealand?

    Yes, New Zealand is the only country that allows tax pooling. It was introduced by Inland Revenue as a response to the challenges associated with designing an equitable provisional tax regime.

  • Buying tax

    Which tax types can I buy tax for?

    INCOME TAX
    If it is your first assessment, you can buy tax for income tax. You have until 75 days after your terminal tax date for that year to use our service. Before the end of the 75th day the transfers need to be made to Inland Revenue. If it is not your first assessment from Inland Revenue for that tax year, and Inland Revenue has issued a reassessment following an audit or voluntary disclosure, you have 60 days from the date of notice of reassessment to use our service. If you are late filing your initial income tax return, Inland Revenue may still allow you to use our service. The criteria is around demonstrating good grounds to believing you had no tax to pay at the time. Please contact us should you want to seek approval from Inland Revenue.

    GST, FBT, RWT, PAYE, NRWT, ESCT, RSCT
    If you have paid your initial assessment you can use our service to save on any additional tax payable in excess of your initial assessment. This must be completed within 60 days of the date of the notice of reassessment. If you have not paid your initial assessment we cannot help you, unless you get approval from Inland Revenue. Please contact us should you want to seek approval from Inland Revenue.

    Can I use this service if I haven't paid my income tax on time?

    Inland Revenue allow taxpayers 75 calendar days after a taxpayer’s terminal tax date for a given tax year to obtain additional tax payments through a tax pool and request they be transferred to their Inland Revenue account. If today's date is more than 75 days after the terminal tax date for the tax year you need tax for, you can only obtain credits if it is for a reassessment and only for the amount of the reassessment. This must be done within 60 days of the date of Inland Revenue's notice of reassessment.

    How long does it take for Tax Traders to confirm a Buy or Sell Request?

    In most cases we can confirm buy or sell requests immediately.

    How long does it take for purchases to appear in my Inland Revenue account?

    Once instructed by Public Trust it usually takes Inland Revenue one to two weeks to complete the process of transferring amounts you have purchased from the tax pool to your Inland Revenue account.

    Do I have to buy or transfer the exact amount I require?

    If it is possible to do so, then this is recommended as it will speed up the processing of your buy or transfer request by Inland Revenue. If you have not yet filed your return for that tax year Inland Revenue will still allow your buy or transfer request but they may contact you to clarify your intentions regarding any surplus. If you have filed your return and are buying or transferring more than you are liable for they will contact you to confirm what you would like done with the surplus: either have it transferred to an associated company or applied against your future provisional tax requirements.

    Can I buy more tax than I think I need?

    If you have not yet filed your return for that tax year Inland Revenue will allow your buy request, subject to the 75 day rule discussed earlier, but they may contact you to clarify your intentions regarding any surplus or potential surplus. If you have filed your return and are buying more than you are liable for at any provisional tax date they will contact you to confirm what you would like done with the surplus: either have it transferred to an associated company or applied against your future provisional tax requirements.

    Can I get my money back if I don't need an amount I purchased anymore?

    If you no longer require an amount you purchased we will work with you and use our best endeavours to get you your money back.

    I’ve purchased too many credits. Can I transfer the surplus to another year?

    A taxpayer can transfer credits forward to the following year only and it must be for income tax. If it is for the same taxpayer the credits will be dated for the first day of the new year. If it’s for another taxpayer the recipient taxpayer receives credits at the date of transfer.

    Can I purchase tax credits at a backdated date for income tax and then transfer them to a non-income tax type?

    You can do this but the effective date of the tax once transferred to another tax type will be the date of the transfer, so there will no longer be any economic benefit.

    What is your rate for buying tax?

    Rates vary depending on the amount of tax you need and the date of the tax. We show a rate on every quote. You can generate a quote by using our online calculator.

    Do you have any minimum limits on how much tax can be bought?

    No we do not have any minimum limits.

    Can I pay my purchase off in instalments?

    Yes, but you must set up an instalment plan to do this using payPlanner. The payments scheduled in the instalment plan reflect the amount you’re purchasing and the period over which you’re paying it off

    What is payPlanner

    payPlanner offers taxpayers the most flexible payment terms on the market. With payPlanner users can choose from one of four options and book it online:

    1. Select any payment date in the next three months to pay for the transaction in full
    2. Nominate a fixed number of payments and the preferred frequency and payPlanner will calculate how much each payment should be
    3. Nominate a fixed amount per payment and payPlanner will calculate the period required to settle the transaction
    4. Pay as you go, allowing the taxpayer to chip away at what they need and payPlanner will tell them how much is remaining after each payment.

    Will buying tax eliminate a late payment penalty?

    In most cases it will. Inland Revenue allow taxpayers 75 calendar days after their terminal tax date for a given tax year to obtain additional tax payments through a tax pool, and request they be transferred to their Inland Revenue account. Provided you do this any use-of-money interest and late payment penalties they have applied to your account will be eliminated to the extent the amounts transferred from our tax pool satisfy your missed obligations. For audits and reassessments the time frame is 60 days from the date of the Inland Revenue’s notice of reassessment.

    Will buying tax eliminate short fall penalties?

    No

    Can I purchase tax but leave it in the tax pool until I have more certainty on my tax payable?

    Yes, please contact us at the time of ordering the tax so we are aware that you want to do this and can ensure the credits are not transferred out of the pool. You will also need to notify us when you’re ready for the credits to be transferred to your income tax account at Inland Revenue. These must be transferred no later than 75 days after your terminal tax date.

    Can tax pooling assist with tax audits?

    Yes it can. If you are subject to an audit and would like to discuss options particularly around cash management of this exposure and how we can assist, please call us on 0800 TAX TRADERS (829 872).

    Can tax pooling assist with tax audits?

    Yes it can. If you are subject to an audit and would like to discuss options particularly around cash management of this exposure and how we can assist, please call us on 0800 TAX TRADERS (829 872).

    How does a break in shareholder continuity affect imputation credits on amounts purchased?

    If there is a break in shareholder continuity during the year then any imputation credits on amounts purchased that are credited to your IRD account at a date prior to the breach in continuity will be lost. Therefore, if you wish to retain the imputation credits post breach you should buy your tax to match a date that is one day after the change in shareholder continuity. Please note this will leave you exposed to UOMI up to the date of the change in shareholder continuity but this is typically preferable to eliminating UOMI and losing any ICA credits.

    Do I have to spread amounts purchased evenly across my provisional tax dates?

    No. Inland Revenue allow you to apply your tax in one lump or three payments or combinations in between. Imputation account debit balances and changes to shareholder continuity are two reasons why you may wish to do this. Our team is available to discuss strategies with you should you find yourself in this situation.

    What happens if Inland Revenue don’t allow me to buy tax?

    We aim to avoid this happening by asking pre-screening questions where necessary as part of the buy process. If Inland Revenue decline your buy request for any reason we will refund your purchase price in full.

  • Financing tax

    How much does tax finance cost?

    Because finance is really buying in advance, we think this should be done for you at a discount, not a premium. We aim to ensure financing with us is always cheaper than buying tax. Currently this means finance rates around 5% p.a. but please use our finance calculator to calculate the specific rate.

    Can I put tax finance in place if the provisional date has passed?

    Yes. Please contact us for a quote to do this.

    How long does it take Tax Traders to confirm a request for tax finance?

    Requests for tax finance are confirmed immediately.

    Do you have any minimum limits on how much tax can be financed or a minimum length of time?

    No, we do not have any minimum limits on amount or term.

    How long can I defer paying my tax with tax finance?

    Typically it is for a period of up to 12 months as we find this is what suits most people's cash flow. At the end of the finance period, for the payment of an additional fee you can extend the maturity date for a further period if required, provided that the maturity date you select is not more than 70 days after the terminal tax date for the tax year you are financing.

    Do I have to pay for the entire amount financed at the end of the tax finance period?

    No. With finance you are securing a guaranteed entitlement to tax but without any obligation to ultimately take it up. Therefore if you realise by the end of the finance period that you no longer need that much tax, you only have to pay for what you need.
    Until now this has been imperfect though because you didn't get anything back on the interest you paid if you didn't need the tax. We've changed that. You can add feeGuard to your tax finance transaction to insure your finance fees, meaning that if you don’t need all the tax finance you put in place, you will get a full refund of your finance fees on the portion you don’t need.

    Can I finance non-income tax types?

    No. Tax financing is only for provisional income tax.

    Can I pay my tax finance principal off in instalments?

    Yes, you can pay the principal off in instalments that suit you prior to the maturity date.

    Can I extend a tax finance contract if it doesn’t suit me to pay it off at the original maturity date?

    Yes, for the payment of an additional fee you can extend the maturity date for a further period if required, provided that the new maturity date you select is not more than 70 days after the terminal tax date for the tax year you are financing.

    What is feeGuard

    feeGuard is an optional add-on to your tax finance. It insures your finance fees. If you have added feeGuard when placing your tax finance order you are entitled to a full refund of the finance fees on any portion of tax finance that you don’t end up needing. This can save taxpayers a lot of money in wasted finance fees. It is recommended for taxpayers who think their actual tax liability could end up being less than the amount they’re financing, or those who want the comfort just in case.

  • Depositing tax

    Do I need to notify you if I am depositing tax into your tax pool?

    No, but you must include the taxpayer name and IRD number as a reference on the payment so we can recognise it in our system. Our system automatically sweeps payments made to the deposit account into the Public Trust tax pooling account at Inland Revenue each night. In order to track your entitlement online we need you or your agent to open an account and add you as a taxpayer.

    When do my deposits need to be transferred to Inland Revenue by?

    Deposits paid into the pool are not subject to any time restriction. But for any amounts you’ve purchased or swapped, these amounts need to be transferred by 75 days after your terminal tax date (amounts being transferred to a related entity will also be subject to this time limit).

    Can my deposits be used for non-income tax payments?

    Yes, because they are your own funds you can use them to cover non-income tax payments where the deposit has been made prior to when the non-income tax payment was due. No time limit applies to this. You can then buy back through us to cover any income tax shortfall (this purchase would need to be completed within 75 days of the taxpayer’s terminal tax date).

    Can I transfer my deposits out of the pool to another taxpayer’s income tax account at Inland Revenue?

    Yes, provided it is done within 75 days of the recipient taxpayer’s terminal tax date. There is no specific ownership percentage required but the tax pooling industry stipulates these need to be related entities.

    Can I transfer my deposits out of the pool to another taxpayer’s account at Inland Revenue for non-income tax?

    Yes, provided the recipient taxpayer has at least 66% common ownership with the depositor and that the date you’re transferring the tax to isn’t earlier than the date of the deposit.

    Can I transfer my deposits from the tax pool to my income tax account at IRD if I haven’t filed a Return yet?

    Yes you can. IRD no longer require you to file a Return before transferring tax from a tax pool to your Income Tax Account.

    I made a mistake on the transfer instruction, what can I do?

    In most cases of genuine error Inland Revenue will reverse the transfer. If you have made a mistake please contact us to request the reversal on your behalf.

    Are there any fees for depositing tax?

    No, there are no fees for depositing or transferring tax.

    Is there a minimum deposit amount?

    No. As a guide, we encourage taxpayers paying more than $50,000 in income tax per annum to deposit into the tax pool because at that level they’re exposed to use-of-money interest regardless of whether they’re an individual or a business.

    How do I know my funds will be safe?

    Public Trust acts as custodial trustee in relation to all client funds. We engaged Public Trust because they are Government owned and are known for their independent and reliable service. All payments and refunds are made to and from accounts owned by Public Trust who acts as custodial trustee on your behalf. Tax Traders has no authority on these accounts. The provisional tax payments you make to the tax pool trust account are also held by Public Trust on your behalf and Inland Revenue has acknowledged Tax Traders has no authority to instruct Inland Revenue in relation to this account. All instructions in relation to client funds and provisional tax payments must be authorised by Public Trust.

    Why can't I pay the Inland Revenue directly if I want to pay my provisional tax to a tax pool?

    Current legislation requires that deposits are made to a tax pool at Inland Revenue via the trustee of the tax pool - in our case, Public Trust. Tax Traders is the first tax pooling intermediary to automate this process, making it quicker and easier for taxpayers. Once you have made your payment to Public Trust, it will automatically be transferred to Inland Revenue that day without the need for same-day cleared payments, follow-up or other human intervention. This reduces time-cost and transaction risk so the process is safer and you save more.

    Will the Inland Revenue still send me payment reminders if I make my tax payments to the Tax Traders’ tax pool?

    Yes. The Inland Revenue system is not able to distinguish between those taxpayers that make their provisional tax payments into a pool and those that don't so you will still receive reminders as you did before. Because tax pool payments do not show in your Inland Revenue account until you advise Public Trust to transfer them for you, any statements that Inland Revenue issue in the interim will show nil payments, and may have interest and late payment penalties recorded.

    Provided you transfer amounts from the pool to exactly match the return you file your final statement from Inland Revenue won't show any interest or late payment penalty charges.

    Can I get my deposits refunded?

    Yes, you can get your deposits refunded in 3-4 days. The industry is governed by the Anti-Money Laundering laws so in order for us to pay out cash, we would need you to complete the relevant identification forms and requirements. If you would prefer to have the proceeds transferred to Inland Revenue you do not need to complete any forms. These forms are available to download from your online account.

  • Selling tax

    Can I sell tax that I’ve paid to Inland Revenue?

    No, you can only sell tax that you’ve initially paid into a tax pool.

    Can I sell tax through Tax Traders that is currently sitting in another tax pool?

    Yes. Tax can be transferred between pools within 24 hours. We can then sell that tax for you for a better return.

    What do I need to do to sell tax?

    Submit a Sell Tax Enquiry and we will provide you with a quote for the tax you want to sell. The industry is governed by the Anti-Money Laundering laws so in order for us to pay out cash, we would need you to complete the relevant identification forms and requirements. We can provide these for you. If you would prefer to have the proceeds transferred to Inland Revenue or redeposited back into the pool you do not need to complete any forms.

    Can I sell tax losses?

    No you cannot sell tax losses through tax pooling.

  • Imputation credits

    When do imputation credits arise on tax pooling transactions?

    For amounts deposited in our trust account at Inland Revenue, imputation credits arise on the date of deposit and you can add them to your ICA return immediately. When you are buying or financing tax, imputation credits arise on the provisional date you have bought or financed but those credits can only be attributed to your imputation return once the tax is transferred from the tax pool to your own Inland Revenue account. For finance, this will be at the end of the finance period not the beginning.

    Can I buy tax to cover an imputation account debit balance?

    You can but only to the extent you are also covering an income tax shortfall. Inland Revenue no longer allow amounts to be purchased purely for the purpose of addressing an imputation account debit balance. The following reference on the Inland Revenue website summarises (among other things) their view of how purchases may be applied to reduce debit imputation balances. Please note you are able to have your P3 payment applied prior to 31 March so that all three provisional amounts purchased can go towards reducing any imputation account shortfall.

    What are the implications for the ICA account if I’m settling a tax finance or tax purchase after 31 March and do I need to update Inland Revenue?

    ICA credits will be effective at the date of tax you’re financing/purchasing, but only once the credits are transferred from the tax pool to the taxpayer’s Inland Revenue account. If the accountant has already filed the ICA return prior to that then they should refile to update Inland Revenue. This isn’t complicated or formal, it can be a simple email outlining that tax credits have recently been transferred to the taxpayer’s account at the respective effective dates and that the ICA account should now be out of a debit position. We can advise you the contact email address at Inland Revenue for this purpose. If the accountant hasn’t already filed the ICA return before the credits are transferred then they should just be included in the return filing. Penalties associated with a debit ICA position will be cleared once the credits are transferred to the extent that you’ve bought/financed tax credits.

    Can imputation credits be traded?

    No, unfortunately that’s outside the bounds of what Inland Revenue allows.

    How does a break in shareholder continuity affect imputation credits on amounts purchased?

    If there is a break in shareholder continuity during the year then any imputation credits on amounts purchased that are credited to your IRD account at a date prior to the breach in continuity will be lost. Therefore, if you wish to retain the imputation credits post breach you should buy your tax to match a date that is one day after the change in shareholder continuity. Please note this will leave you exposed to UOMI up to the date of the change in shareholder continuity but this is typically preferable to eliminating UOMI and losing any ICA credits.

    I deposit my tax into the tax pool and there is going to be a change in shareholder continuity. What do I do?

    The rules governing the treatment of ICA credits in these situations (set out in Sections OB and OP of the Income Tax Act 2007) are very fact specific. Please contact us ahead of time to discuss your requirements should you find yourself in this situation.

  • International clients

    As an international taxpayer, I haven’t heard of anything like this before

    Inland Revenue’s tax pooling system is unique to New Zealand so you won’t find anything similar in foreign jurisdictions. It is their way of enabling taxpayers to mitigate their exposure to interest charges where payments are made late and provide benefits where tax has been overpaid. It is a service that is provided in conjunction with the private sector by approved intermediaries and is used by most of New Zealand’s large corporates, many of whom have foreign head offices. We are happy to put you in touch with existing users should you have any specific questions.