Fonterra recently updated their forecast payout for the 2021/22 season, both increasing and narrowing the range again following the same result in late October. The current forecast range of $8.40 – $9.00 per kgMS pushes the midpoint up to $8.70 per kgMS.
The strong payouts for the last few seasons as well as the current season is providing good cashflow results and in many cases significantly increased tax positions.
From a tax and cashflow point of view, the payout profile is as follows:
*These are derived from the base advance rate plus the capacity adjustment and will vary slightly across farms.
As a result of these stronger payouts, many clients have been paying provisional tax and making voluntary payments in recent years. With strong increases this season, provisional tax will be important again this year. For some clients we may need to revisit tax estimates done before these latest announcements. For those who have not yet had your 2020/21 accounts completed, we encourage you to make contact as soon as possible to have these progressed.
In most cases, any top up in provisional tax will need to be paid by 28th June 2022. For May balance date clients, your next installment of provisional tax is due on 28th February 2022 so please feel welcome to touch base with your client manager at that time if you are concerned about your upcoming tax payments and would like your taxes reviewed.
We will keep you updated as the season progresses and be in touch with those clients we foresee needing to make additional provisional tax payments closer to the June installment.