"For a little more than $2000, they can buy themselves 12 months' breathing room. That is a rate of around 4 per cent."
There are no credit checks or security required to use the service. The arrangement does not affect other lines of credit.
Farmers do not have to pay back the amount financed if they do not end up needing the tax, Mr Cunniffe says.
How it works: A farmer pays TMNZ an upfront finance fee, which is based on the amount of tax financed and the date in the future they wish to pay, and TMNZ makes a date-stamped tax deposit on their behalf into its tax pool account at IRD.
At the agreed upon future date, the farmer pays TMNZ the principal and TMNZ arranges for that date-stamped deposit to be transferred to the farmer's IRD account.
Mr Cunniffe says IRD treats the tax as if it was paid on time once it processes this transfer, eliminating any interest and late payment penalties incurred.
Meanwhile, Tony Marshall, a tax advisory partner for Crowe Horwath business advisers and accountants, says that with IRD release of the 2017 National Standard Cost (NSC) values for livestock a fortnight ago, the gap between the two livestock valuation schemes used for taxation purposes is set to diverge once more after coming to its closest point last year, closing a window of opportunity to cost-effectively switch between schemes.
"By using standard nationwide averages for the cost of production of an animal, farmers are spared the effort of running a complex calculation on their own, resulting in a considerable compliance cost saving," he says.
The livestock valuation methods most commonly used are NSC and the Herd Scheme (HS). Valued under HS, movements in livestock values are non-taxable, whereas under NSC they are taxable as income or a deduction.
Release of the NSC figures reduced average dairy cattle production costs from $529.10 to $404.10 for breeding, rearing and growing a rising one-year-old heifer and from $414.20 to $322.50 for growing a rising one-year heifer into a rising two-year-old.
As the livestock ages the value feeding into the mixed aged cow tax values will reduce, increasing the difference between NSC and HS values, producing deductions for farmers on the NSC scheme in the 2016/17 year for their capital stock.
"This is positive for those using NSC who have moved back into profit, as the movement will have a dampening effect on profitability, improving their tax position."
Those on HS are not affected. But Mr Marshall says farmers considering a move to HS are likely to see values compared with NSC widening.
"Last year we saw the HS value of a mixed aged dairy cow fall to $1356, with the NSC value about $900 and the $456 difference the smallest for many years. This year, HS values are expected to return to 2014/15 levels when announced in May."
If HS values increase as expected the differential between the NSC and HS values is likely to increase to $845.
Mr Marshall says the substantial drop in the NSC values is owing to the reduced payouts for dairy which has driven farmers to cut costs.
But with payouts increasing in recent months, he anticipates that while NSC values are down, HS values will increase.
"Owing to the volatility of the dairy payouts last year, farmers have generally reduced herd sizes. Purchasing cows has become quite difficult, pushing prices up further - and that will impact on the HS values come May."
Market shifts mean opportunities for tax optimisation will continue to change and Mr Marshall urged farmers to discuss individual needs with their tax advisers.
