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Financing business growth with provisional tax
accelerateonline • Sep 06, 2018
There are several options available when it comes to accessing money to invest in your business.
However, did you know that provisional tax payments are also a source of finance?
Tax Finance, an option offered by an IRD-approved tax pooling provider such as Tax Management NZ (TMNZ), lets you free up working capital by deferring a provisional tax payment to a later date, without incurring IRD interest of 8.22 percent and late payment penalties.
The cost is cheaper than using your business overdraft or an unsecured loan. Approval is guaranteed, and no security is required.
Who might Tax Finance suit?
It will suit those who:
- Are looking for funding that doesn’t affect other lines of credit or who want to keep headroom in their existing lending facilities.
- Don’t wish to go through the rigmarole of the normal lending process.
- Want a fixed interest cost.
How does Tax Finance work?
- You pay TMNZ an upfront finance fee, which is based on the amount of tax due and the future date you wish to pay, and TMNZ puts a date-stamped tax deposit aside for you in its tax pool account at IRD.
- At the agreed upon future date, you pay TMNZ the tax owed.
- TMNZ arranges for your date-stamped tax pool deposit to be transferred to your IRD account. IRD treats this as if the tax was paid on time once it processes the transfer, eliminating any interest and late payment penalties incurred.
Contact us for more information.
Accelerate - December 2023
Accelerate August 2023
Inland Revenue have recently announced this year’s livestock Herd Scheme Values and we think this is a great opportunity to update you on the latest movements. The Herd Scheme Values are the National Average Market Values, determined by a process involving a review of the livestock market as at 30 April.
The values for Dairy this year have seen a fall in values across all female classes, but increases across all male classes. The fall in R1 heifer values can be attributed to the prohibition of live export by sea commencing from 30 April 2023. For the first time the National Average Market Value for R1 Heifers is less than the National Standard Cost of breeding and rearing an R1 Heifer.
In contrast to Dairy values Beef values have increased on average 9% and are almost at record values for all classes.
Sheep values have all fallen from the high of 2022, slipping back an average of 10.2%. Whilst values have fallen, they are still either the second or third highest that they have ever been depending on which class of sheep you are looking at.
Goat values have increased on average 7.8% with almost all classes of fibre and meat producing goats at record highs. The value of milking goats continues to be well down from historic highs, except for breeding bucks which are at their highest value.
Like the rest of the world, New Zealand has reeled from the aftermath of Covid, rising inflation and interest rates, and the cost-of-living crisis. This year we also have a massive storm damage repair bill.
Any tax cuts, or changes to the tax thresholds were vetoed in Budget 2023 as this was viewed as worsening inflation.
Budget 2023 builds on the $889m already provided in response to this year’s storms. A further $6b is allocated for a National Resilience Plan , for rebuilding after weather events. $71b is committed to new and existing infrastructure projects: not only storm damaged communications, power and roading, but schools, hospitals, public housing, rail and road.
