For all of their increasing complexity, computer programs are still simple beasts — bound by binary rules that enable algorithms to sort huge amounts of data. This makes them the natural partner for accountants, according to Tax Traders technical architect Tim Kirkpatrick.

“Tax is defined by legislation, it’s all there in black and white,” he says. “Embedding IRD regulations into technology is a nice fit, because it solves complexity by consistently applying rules.”

Rather than making chartered accountants obsolete, streamlining data unlocks their skillsets — allowing them to find their competitive advantage.

“Businesses can accelerate by spending less time thinking about how they can apply accounting rules, and focus on what they’re going to do next,” Kirkpatrick says. “That’s where value creation lies, and where accountants make a difference for their clients.”

New Zealand’s unique tax pooling system offers many advantages, but it has historically been difficult to implement for smaller businesses.

“The more manual steps you have in a process, the longer it takes,” he says. “When accountants are working on billable hours, it often hasn’t been worth pursuing tax pooling because it simply took too long when compared to the dollar savings.”

Now, technology-driven analysis of each client’s data can optimise their tax position in seconds by calculating their obligations against payments they’ve made and any shortfalls.
“Accountants are then freed up to do what they do best, and work out payment plans that fit into cashflow projections across a range of short and longer-term scenarios.”

Pictured: Tim Kirkpatrick, Tax Traders

Better workflow and cashflow

The last few years have been tough for Kiwi businesses. This has heightened considerations around working capital and funding options, such as the ability to defer provisional tax payments and the ability to access new sources of working capital.

“The smart automation of our complex tax legislation ensures that more businesses can access these benefits and stay compliant while prioritising cashflow,” Kirkpatrick explains.
Technology is also seeing accountants increase their ‘value-add’ with tools that empower workflow automation of provisional tax payments.

“A residual income tax calculator - particularly one attached to an Inland Revenue data feed - allows business owners and accountants to assess their provisional tax uplift requirements in real time. Given we can now move around money instantly, there equally shouldn’t be any lag time in executing these decisions. The right fintech solution should offer features such as a one-page overview of several options for payment of provisional tax that can be compared, contrasted and customised to a particular cashflow situation – and it should all be submittable online.”

A flexible, proactive future

Accounting firms are increasingly considering how technology can optimise tax payment flexibility to benefit their clients.

“There’s no reason why a taxpayer should be constrained to paying tax on three arbitrary dates, just because those are the ones that appear in tax legislation.”

Data analytics is advancing to connect Inland Revenue data to an overview of an accounting firm’s entire portfolio, proactively detecting mistakes. “Flagging clients who have forgotten to pay their tax on time, so their accountant can work with them to resolve that error – rather than finding out a year down the track – is a game changer.” 

Find out more:

For information on why over 800 accountancy practices and more than 12,000 taxpayers are using Tax Traders technology, visit taxtraders.co.nz