Ever feel you’re the meat in a tax sandwich?
IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.
Are you worried about paying your terminal tax bill on 7 April?
We understand how terminal tax can sometimes put pressure on your business’ cash flow. Even more so, if it’s worked out that you also owe Inland Revenue (IRD) for interest and late payment
penalties on the unsettled liability. And, if you add into
the mix that looming provisional tax payment due on 7 May (the final installment for the 2015 year)… well, it can add up to a few sleepless nights, right?
If this describes your situation, stop losing sleep and pick up the phone. Let’s look at the issue squarely, run the numbers on your options, and take prompt action before your tax bill escalates.
How could I have an underpaid provisional tax for the 2014 tax year?
It could have happened if you didn’t keep up with your provisional tax payments throughout the year.
Or it may have happened if you had a better year in 2014 than you expected to (‘yay, we made more money), then you probably owe more tax than you expected to have to pay (‘yay…’).
When your business income fluctuates, it can be hard to estimate exactly how much provisional tax you should pay. That’s why it’s a good idea to keep track and let us know about peaks and troughs through the year. This is something we can help you with in the future.
What if I do owe tax for the 2014 tax year?
If it works out that you have tax to pay, there are a number of options available to you.
It could be possible to negotiate a payment arrangement with IRD and make payments over time. We can help you build and submit the proposal.
You could borrow money from the bank or family. If you want to explore borrowing from the bank, let’s look at it in the context of your total debt position and see what options are most economical for you in the longer term.
Or you could use a tax pooling service. You can reduce your IRD interest costs by up to 30 percent and eliminate late payment penalties if you purchase underpaid tax from Tax Management NZ.
If you are worried about managing your tax please contact us.