The government has expanded the use of tax pooling to cover income tax debt – a first for New Zealand. Kathleen Payne, head of adviser relationships at TMNZ, discusses what this means for accountants and their clients.

This feels like a significant shift. Can you explain what’s changed?

It really is a landmark moment. Tax pooling has traditionally been used to manage provisional tax, but for the first time, it can now be used to settle income tax debt – specifically for the 2023 and 2024 tax years. A formal trial runs through to 30 September 2027, and we’re urging advisers to act on it now, because many of their clients are likely eligible.

Who qualifies?

Clients need to have income tax debt for 2023 and/or 2024, with no overdue GST or PAYE, no outstanding returns, and they can’t be under insolvency or legal proceedings related to revenue recovery. But Inland Revenue (IR) may allow clients who already have an instalment arrangement with IR to address their debt, to participate in this new offering – that’s a detail some advisers may miss.

Why use tax pooling rather than just staying with IR?

The numbers speak for themselves. With IR, clients face late payment penalties of 5.04% on top of interest rates of up to 10.91%. Through TMNZ’s tax pool, those penalties can be eliminated entirely, and the interest rate is significantly lower. But beyond cost savings, the client experience is fundamentally different. We’re a partner in resolving the debt – not a revenue collector. Clients get prompt, dedicated support rather than waiting up to 15 working days for a response.

What should advisers be doing right now?

The window to act is open, but it won’t be open forever – businesses have until 30 September 2026 to set up a payment arrangement, with the debt to be cleared by 30 September 2027.

The good news is that the process is straightforward. Accountants apply via TMNZ on behalf of their clients, and once eligibility is confirmed, we send through the arrangement details and payment instructions. The savings can also be significant – settling a NZ$20,000 debt through TMNZ rather than IR could save a client more than NZ$1800. For many SMEs, that conversation is worth having urgently.

Why is TMNZ well-placed to lead on this?

We’ve been New Zealand’s tax pooling leader for more than two decades and we’re the exclusive tax pooling partner of CA ANZ. We have the expertise, industry relationships and dedicated specialist team to make this as seamless as possible for advisers and their clients. This initiative is exactly the kind of practical, cost-effective solution the profession needs right now.

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TMNZ is CA ANZ’s Tax Pooling Partner in New Zealand. To learn how TMNZ can help manage and reduce the cost of historic income tax debt, click here.

To access TMNZ’s dedicated tax debt webinar, click here.