Business impact with Tax Pooling changes

Prior to these rule changes, some taxpayers accessed tax pooling funds (with a back-dated effective provisional tax date) to pay outstanding GST liabilities in order to remove their exposure to penalties, as well as UOMI. GST is a tax liability that is known with certainty at the time of payment. Tax pooling was never intended to assist tax payments for businesses where those payments are definitive.

The rule changes can be summarised as follows:

• Tax pooling will be extended to additional tax payable as a result of a reassessment
• Includes Voluntary Disclosures and Resolution of a Dispute
• This will cover all tax types
• Funds will only be accessed with a backdated effective date for the difference between the amount originally payable and amount payable as a result of a reassessment
• Transfers of excess tax for all tax types will be allowed for deposit into a tax pooling account
• Where a taxpayer transfers money to pay provisional tax with an effective date after terminal tax date, payment should be applied first to interest outstanding, then to the outstanding tax liability
• The transfer of tax pooling funds between intermediaries will be allowed.

Further information can be obtained from Josh Taylor at Tax Management NZ.

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