16/06/2020

Provisional tax purchases through pooling for 2019 income year

The deadline for tax purchases for 2019 income year tax underpayments would usually close out 75 days after your terminal tax date.  For the majority of taxpayers this means tax shortfalls for the 2019 income year need to be purchased and transferred to Inland Revenue before the fast approaching 21 June 2020.  If your balance date was between 31 October 2018 and 28 February 2019 the ability to purchase would normally be gone.

The tax pooling agents, whose business it is to sell you tax and hold your tax deposits, have organised an extension for tax purchases for the 2019 income year.  Instead of the above standard 75 day post terminal tax date restriction purchases can be made 365 days post terminal tax date as long as its organised with the pooling agent before 21 July 2020.

This is a cash-flow benefit only.  Your purchase needs, i.e., the amounts underpaid for 2019 need to be understood and organised the purchase before 21 July 2020.  It is also necessary to be able to demonstrate the following to access this extension, otherwise the standard 75 days apply.

1.    A significant decline in actual or expected revenue between January and July 2020
2.    This decline in actual or expected revenue was “related to” COVID-19
3.    This decline in revenue must have resulted in a taxpayer either;

  • Being unable to pay their 2019 terminal tax through a tax pool as anticipated, or
  • Being unable to enter into an arrangement with a tax pooling intermediary

Supporting information (details not specified) must be supplied to the pooler when requesting an extended settlement period under this extension.

If you have an outstanding income tax liability for 2019, please contact your usual VCFO adviser to discuss your options.