Tax pooling offers a range of benefits for Kiwi firms. It allows businesses to manage their tax payments and cash flow, as well as keep funds aside to invest in growth opportunities.

“Tax pooling is a system in New Zealand that allows taxpayers to pay tax when it suits their business, while ensuring the Inland Revenue receives the tax it’s owed on time,” says Josh Taylor, the managing director of Tax Traders, an Inland Revenue-approved intermediary.

Under the tax pooling system, Tax Traders can customise payment arrangements with the taxpayer so they can pay their tax when they have cash in hand, or delay the payment if they have a temporary cash-flow shortfall.

Picture: Josh Taylor.

How tax pooling is demonstrating tangible value

Because tax pooling is a government initiative, there are unique factors that benefit taxpayers such as low interest rates and no need for financial disclosure. As compliance becomes increasingly automated, tax pooling is a way for accountants to demonstrate tangible value to clients. For example, modelling for a client the benefits of paying a $20,000 tax obligation now, deferring it, or splitting payments over a six- or 12-month period and instead using that cash to invest in growth.

“It’s a very flexible system and accountants have full control over their clients’ arrangements and the ability to amend their clients’ tax payments if their circumstances change. The taxpayer can make additional payments if more cash comes into the business than anticipated, or delay tax payments if they don’t receive as much income as they expected,” Taylor adds.

Helping businesses maintain momentum is a key factor. Tax pooling provides another option to retain cash in the business when it’s required, while still ensuring tax obligations are met.

“Let’s say a business is going through a growth spurt and needs to hire staff or buy equipment right at the time their provisional tax is due. Often there’s not enough money to do both. Tax pooling enables the business to make their tax payment later, so they can invest in these initiatives which support their growth and the underlying strength of the economy,” Taylor explains.

Tax pooling is shaping the future

Advances in technology are making tax pooling easier than it has ever been for accounting firms – whether they are small independents or large multinationals.

Tax Traders’ proprietary software has been designed to automate the entire tax pooling process. Its online, self-service platform is making life easier for accountants, offering clear dashboard reporting as well as ready-to-go statements and fully customisable payment options to suit client requirements.

“Creating a seamless, intuitive tax pooling experience for our clients constantly fuels our imagination,” says Taylor. “Our in-house development team has created the most advanced digital platform in the industry, offering greater speed, accuracy and flexibility than any other solution available.”

Tax Traders is also the only tax pool with a two-way data interface with tax accounting software Taxlab.

“Our key driver for ongoing innovation is our relentless focus on our clients. Listening to their needs is critical. Together we’re shaping the future of tax pooling and helping thousands of New Zealand businesses to flourish and grow,” says Taylor.

“Our key driver for ongoing innovation is our relentless focus on our clients. Listening to their needs is critical.”

Insightful reports

Tax Traders has combined data visualisation into all of the tax payment options on its digital platform.

Below is a graphic of a fully customisable tax payment plan that can be completed in just a few minutes with all transactions automatically lodged. Using this tool, accountants can identify the best payment solution to help their client save money and manage cash flow.

A visual report can be downloaded to share with clients, showing the range of options available.

Figure 1. Tax payment plan. Click image to enlarge.

Read more:

• Find out more from Tax Traders
• Book a 20-minute consultation with one of Tax Traders’ senior support team in New Zealand by calling 0800 TAX TRADERS (829 872) or emailing [email protected]
• How Tax Traders was a “game changer” at Greenlion
  Greenlion accountant Richard Denton says using Tax Traders slices hours off his work and lets him serve his clients better. Watch his story.