Tax Management NZ (TMNZ) enables businesses to manage cashflow by paying income tax in monthly installments, without incurring late payment penalties.
Flexitax, which is approved by Inland Revenue (IRD), helps you ease the burden of large provisionaland terminal tax payments by letting you pay what you can, when you can.
Late payment penalties are eliminated and IRD interest costs reduced by up to 30 percent using this Income tax for the current tax year or one just completed can be paid off using Flexitax.
TMNZ interest is calculated on the remaining tax owed each month, and you have until 75 days after your terminal tax date to make your final payment.
Where might Flexitax be useful?
Scenario A: upcoming provisional tax payment
A business has an upcoming provisional tax payment of $10,000 for the 2016 tax year due on 15 January.
To activate Flexitax, the business would pay to TMNZ part of the amount due on 15 January.
Assume it chooses to pay $2000 first up. This payment, and additional Flexitax payments, would be made into a bank account administered by an independent trustee.
TMNZ would issue the business an updated balance statement showing $8000 is left to pay off. Updated balance statements are sent to the business each month under a Flexitax arrangement until it pays off what it owes IRD.
The business will incur an interest cost – but this will be much less than the 9.21 percent IRD
The independent trustee will transfer each payment from the tax pool to the business’ IRD account.
Transfers will show on the business’ IRD statement once it has been processed by IRD as if the tax had been paid on 15 January 2016, eliminating late payment penalties and interest.
Scenario B: underpaid income tax
A business owner has been notified by their accountant that they have underpaid provisional tax for the 2015 tax year by $15,000.
They decide to pay $5000 at their first payment and then the remaining $10,000 whenever they can after that, but before mid-June 2016.
Call the TMNZ Customer Support Team on 0800 829 888 for more information about Flexitax.
