Tax pooling to become more taxpayer friendlyRevenue
Revenue Minister Todd McClay has signalled changes to tax pooling rules will mean that taxpayers can use tax pooling arrangements to pay any interest owed as a result of a tax dispute or an amended tax assessment.
Tax pooling assists businesses by making it easier for them to plan for changes in tax obligations. The current rules allow taxpayers to withdraw funds from a tax pool to cover the tax owed but not any interest that might be due. This can result in further interest accruing on the remaining amount which was not the original intention of the legislation.
“This decision will be welcomed by the tax advisory community who were consulted during the process and have been seeking this amendment for some time,” Mr McClay says.
“For businesses, a key concern is certainty in their tax affairs.”
“The current situation is contrary to the original principle of tax pooling and has a real impact for a growing number of taxpayers who are either in dispute with the Inland Revenue or subject to an amended tax assessment.”
“Meeting tax obligations can present problems for many businesses as a result of timing and assessment issues. Tax pooling rules can be helpful in allowing businesses to pool their tax payments with those of other businesses, through commercial intermediaries.”
To ensure that taxpayers have certainty the Government proposes to introduce an amendment in the next available tax bill to apply retrospectively from today’s date.
“The amendment will help ensure that the pooling regime continues to be helpful for New Zealand businesses and will allow them to conduct their tax affairs with certainty,” Mr McClay says.