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West Auckland pharmaceutical company Douglas Pharmaceuticals has been investing heavily into R&D and capital expansion. So when cash was needed on a specific date to pay provisional tax this year, the company could have gone to the bank for a short term loan. But a much better and more instant solution was Tax Management New Zealand’s (TMNZ) Tax Finance.

Similarly Icebreaker, the New Zealand company that pioneered the wool adventure apparel category, found Tax Finance the perfect solution when it needed to pay the New Zealand portion of its provisional tax this year.

Douglas Pharmaceuticals is the largest New Zealand-owned pharmaceutical company and was founded in 1967 to supply New Zealand’s generic and over the counter market. The company expanded into export 15 years ago and export sales have grown strongly since. Export revenues to Europe, Australasia, the US, Asia and Middle East are expected to exceed $96 million in the coming year. 

The fluctuating exchange rate and erratic export receipts over the past few years have made it hard for Douglas Pharmaceuticals to accurately predict earnings for provisional tax payments.  The company often overpaid its tax to the IRD to avoid use-of-money interest and minimal interest on such payments. TMNZ ‘s tax pool was initially utilised by Douglas to avoid such overpayments.

Additionally being able to access immediate cash using Tax Finance in May was hugely beneficial, says the company’s group financial controller, Kent Durbin. “Significant outgoings haven’t always matched up with lumpy cash receipts from the export side of the business. The ability to tap into Tax Finance has been employed from time to time when cash is required in other parts of the business.

“It cost us 5.4 percent – much lower than would have been available through a bank as an unsecured short term line,” adds Durbin. “We approached TMNZ three days before the 7 May tax date about funding several million for a month and a half. And we had an immediate response which was put in place with minimal fuss.”

Icebreaker, like Douglas Pharmaceuticals, is another New Zealand company whose export business has expanded rapidly in recent years. For some time, TMNZ has helped Icebreaker with its cashflow management, ensuring all its taxes are paid on time.

Head of finance, Andy Wells says they’re looking at around $200 million dollars worth of sales this year, around 80 percent of which will be offshore.

“Given the number of countries we export to and the ongoing volatility in the New Zealand dollar, it’s hard for us to predict accurately at the start of a year what our final NZD profits will be,” says Wells. “Tax Finance and Purchases allow us to manage this volatility without being subject to use-of-money interests.

Tax Finance lets businesses retain cash for business purposes while meeting their provisional tax obligations. TMNZ’s CEO Chris Cunniffe explains: “It’s particularly useful for businesses that earn income unevenly throughout the year. It allows companies to get readily available cash at incredibly competitive rates – up to 50 percent lower costs than using a traditional overdraft facility – without having to dip into their cashflow.

“A company may have a provisional tax instalment of $1 million due on 28 August. But this is the time of year when it needs to increase its stock ready for export.  On behalf of the business, TMNZ arranges for the $1 million in provisional tax to be transferred to TMNZ’s tax pool account at the IRD. The business makes an upfront payment of the financing cost of the tax instalment. At a pre-selected date later in the year, when they have sufficient cash, they pay TMNZ for the tax instalment. IRD treats the tax payment as having been made on time, so there are no costly late payment penalties.

“Companies can borrow as little as $5000. Anyone can use Tax Finance and there are no credit approvals required. It makes good, practical cost management sense – even the finance fee is tax deductible. And an online account lets businesses track their Tax Finance.”

Kent Durbin adds: “Our website ( is really easy to access for statement information and the team is always hugely accessible for any additional queries or transactions.”

Over the past seven years, TMNZ has provided hundreds of millions of dollars in Tax Finance to customers. It’s especially ideal for exporters operating in a volatile marketplace. 

Glenn Baker

Glenn is a professional writer/editor with 50-plus years’ experience across radio, television and magazine publishing.


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