January 2023 Tax Update

IRD News – Increase in Use of Money Interest

If you underpay income tax IRD charge you interest.  And if you overpay your income tax they pay you interest. Sounds great, but the interest rates in each scenario are not the same….

Inland Revenue has recently increased their interest rates on underpaid tax. The new underpayment rate for use of money interest is 9.21% (previously 7.96%). The new overpayment rate is 2.31% (previously 1.22%). These new rates apply from 17 January 2023.

Contact Q2 if you would like to discuss how this may affect you and ways you can reduce the impact.

31 March 2023 (IRD Filing Deadline) is Looming

Most NZ tax payers have a 31 March balance date.  Taxpayers not on a tax agent’s list should have already filed their 2022 tax returns.  For others (including most Q2 clients) the final filing deadline for 2022 income tax returns is 31 March 2023 – avoid late filing penalties by sending Q2 your 2022 accounting information urgently.

Reminder – Income Tax Payment Dates

The second instalment of 2023 provisional tax for most tax payers was due 16 January 2023, and the last instalment is due by 7 May 2023.

2022 Terminal Tax is due by 7 April 2023 (or 7 February 2023 if you were late filing your tax return last year, or are not on a tax agency list).

Also, if you are facing cashflow challenges tax pooling may be an option.  Tax pooling/tax purchases may allow you to delay tax payments, reduce IRD interest charges, and avoid late payment penalties – sweet!

Contact Q2 if you are unsure about your upcoming tax payment obligations or would like to know more about tax pooling/tax purchases.

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