In fact, more than half of those who responded to an Employers and Manufacturers Association poll said they experienced cashflow constraints between January and March every year.
There are several reasons why.
• Holiday Pay demands prior to the holidays
• Closing down over the holidays reduces cash flow
• The period following the holidays is traditionally slow
• GST and Provisional tax falls due 15th January, straight after holidays
On that final note, the Inland Revenue (IRD) is quick to reinforce that if you do not pay your taxes on time you will feel the repercussions in your back pocket. This will include charging late payment penalties of up to 20% pa and use of money interest (UOMI) of 8.4%.
Fortunately, Tax Management NZ (TMNZ) has an IRD-approved solution that allows businesses to resolve holiday cashflow issues. This solution is called Tax FINANCE (TF). TF lets you pay provisional tax when it suits you – without incurring late payment penalties and UOMI.
It is cheaper than many other traditional forms of finance – rates start from below 6% – and this extra funding does not affect existing lines of credit.
For instance, it costs just $145 to defer a $5,000 provisional tax payment for six months.
Approval is guaranteed, and no credit check or security is required.
Here is an example how TF (Tax FINANCE) works
1. You decide you need to delay payment of your provisional tax of $5,000 for 6 months
2. You pay TMNZ a one-off, tax-deductible finance fee of $145
3. TMNZ then pays the $5,000 into an IRD account held by the Guardian Trust (GT).
4. Six months later, you pay TMNZ the $5,000 provisional tax. Any IRD late payment penalties and interest will be reversed when transfers are complete.
How simple is that?
Please contact Accounts Online to find out more.