How to defer a provisional tax payment
Tax pooling can help an eligible taxpayer manage the timing of provisional-tax funding through a registered tax-pooling intermediary. It does not change the statutory Inland Revenue due date.
What tax pooling does
Registered intermediaries operate tax-pooling accounts with Inland Revenue. Subject to the tax-pooling rules and the customer's arrangement, funds can later be transferred from the pool to the customer's income-tax account with an effective date that relates to the original tax period.
This can reduce exposure to Inland Revenue use-of-money interest and late-payment penalties when the transfer is completed correctly and on time. The customer must still meet the intermediary arrangement and all applicable transfer rules.
What tax pooling does not do
Tax pooling does not:
- replace or move the statutory Inland Revenue due date;
- guarantee that every application will be accepted;
- create a new due date agreed directly with Inland Revenue;
- apply to every tax type or every payment situation; or
- remove the consequences of failing to settle the arrangement.
Until a valid transfer is completed, Inland Revenue may continue to show the original tax position and may issue statements or notices.
Which provisional-tax methods can use it?
Tax pooling is generally available for taxpayers using the standard, estimation or ratio provisional-tax methods. It cannot be used for provisional-tax payments calculated under AIM.
Tax pooling may still be relevant to some terminal-tax amounts, reassessments or other permitted income-tax amounts. The rules and transfer deadline depend on the tax period and the type of liability.
Costs and Supercharge Pro
A tax-pooling finance arrangement can involve provider financing costs. Afirmo's Supercharge Pro plan currently includes fee-free tax deferment, meaning Afirmo waives its fee for arranging the deferment.
This does not mean every arrangement is free. Ask Afirmo to confirm eligibility, the intermediary, the finance cost, the settlement date and any other terms before accepting an arrangement.
If the arrangement is not settled
If the customer does not settle the arrangement on time, the intended transfer may not occur. Inland Revenue interest and penalties may then apply based on the original tax position. Contact Afirmo and the intermediary as soon as a payment problem becomes likely.
Before relying on deferment
Confirm all of the following in writing:
- the taxpayer and tax period covered;
- the amount being financed;
- the provisional-tax method being used;
- the intermediary's settlement or maturity date;
- all Afirmo and provider costs;
- what happens if the amount or filing position changes; and
- the consequences of late or failed settlement.
Frequently asked questions
Does tax deferment change my Inland Revenue due date?
No. The statutory Inland Revenue due date stays the same. The separate arrangement is with a registered tax-pooling intermediary.
Is acceptance guaranteed?
No. Eligibility and terms must be confirmed for the taxpayer, tax period and amount.
Can tax pooling be used for AIM provisional tax?
No. Tax pooling cannot be used for provisional-tax payments calculated under AIM.
What does fee-free deferment on Supercharge Pro mean?
It means Afirmo waives its fee for arranging the deferment. Provider finance costs or other arrangement-specific amounts may still apply.
What if I cannot settle on time?
Contact Afirmo and the intermediary immediately. If the transfer does not occur, Inland Revenue interest and penalties may apply based on the original tax position.