Tax Pooling Benefit Calculator

This calculator estimates the saving from using a tax pooling provider to settle overdue provisional tax, by comparing the Inland Revenue use-of-money interest you avoid against the lower finance cost charged by the pool. Tax pooling is an Inland Revenue–approved arrangement where businesses pay tax into a pool, and others who have underpaid can buy that tax, dated back to when it was originally due. The benefit is twofold: it can eliminate the late-payment penalties Inland Revenue would charge, and it replaces Inland Revenue's use-of-money interest, which is relatively high, with the typically lower interest charged by the tax pooling provider. For a business that has underpaid provisional tax, this can mean a meaningful saving on the cost of catching up. This tool estimates that saving. You enter the amount of tax owing, how many months it is overdue, Inland Revenue's annual use-of-money interest rate, and the annual interest rate the tax pooling provider charges, and the calculator works out the Inland Revenue interest you would otherwise pay, the tax pooling finance cost, and the net saving. The results update as you type. Use it to decide whether tax pooling is worthwhile, to estimate the saving, or to compare providers. The Inland Revenue interest is the tax owing times its interest rate, prorated for the months overdue; the pooling cost is the same calculation at the pool's rate; and the saving is the difference, before any penalties avoided, which add further benefit. Because tax pooling interest is usually well below Inland Revenue's, the saving grows with the amount owing and the time overdue. The rates change, so the calculator lets you enter current figures. This is an estimate of the interest saving; pooling providers quote firm prices, and there can be eligibility and timing conditions, so confirm with a provider or your accountant.

Saving = (IRD rate - pooling rate) x tax x months/12, before penalties avoided. Rates change, so enter current figures. Pooling can also remove late-payment penalties. Confirm with a provider.