Fintech firm Taxi wins law change on borrowing against provisional tax, reveals numbers

Taxi founders Josh and Nicola Taylor.

Taxi, a fintech that lets small businesses borrow against their provisional tax balance, has won a key legislative clarification and revealed its lending numbers.

The start-up was formed in 2021 in the teeth of the pandemic. Its husband-and-wife co-founders, Josh and Nicola Taylor (owners of Tax Traders) said the Covid economy had restricted borrowing options for many small to medium businesses.

Large companies had the option to borrow against their pre-paid provisional tax, sitting in a Public Trust account, but the process was complex.

They founded Taxi to help small businesses navigate it.

This week, Nicola Taylor told the Herald that Taxi was running ahead of its targets. It has now made $107.8 million in funding available at an average of $149,101 per taxpayer. The business has 1246 active users, 723 active taxpayers.

Until a few days ago, there was one potential wrinkle. But that was resolved when a law change clarified that using a provisional tax deposit to unlock working capital – for example, using it as a security to borrow money via Taxi – won’t affect your imputation credits.

Imputation credits are like proof that your company has already paid tax on its profits. They’re passed on to shareholders when your business pays dividends – so those shareholders don’t get taxed twice on the same money.

The tweak, which followed a submission by Taxi, came in the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill which gained royal assent on March 29 and came into force on April 1 – setting the ground rules for the 2025 financial year and beyond.

The legislation now makes it clear that when a business uses Taxi – and temporarily transfers a security over a tax pool deposit to access funding – it won’t trigger a debit in their imputation credit account or ICA, Taylor says.

An ICA debit will only occur if the borrower defaults on their agreement, and ownership of the deposit permanently transfers to Taxi.

In a January 2025 report to the Finance and Expenditure Committee, which shepherded the bill through Parliament, the Department of Inland Revenue backed Taxi’s submission.

A submission by “IRD officials” (see page 277) said the situation for customers of the new financial product was too complex for clients, meaning they had to seek advice.

IRD added that the (now superseded) set-up “creates an integrity issue that could allow taxpayers to circumvent the imputation continuity rules by parking imputation credits with the lender when they have a continuity breach, which is not desirable”.

“The way Taxi works has now been written into tax law,” Taylor says.

“It’s a big moment for us.”

If you’re up-to-date with your taxes, AML-compliant and profitable, Taxi can release funds by the next working day at 5.90% (plus a 0.15% monthly fee).

Taylor says many clients were previously paying a business banking overdraft rate of 20% or more.

First two corporate clients

Taxi was created with SMEs of 10 or more staff in mind.

But Taylor says it’s recently signed its first two corporate customers. Their identity couldn’t be shared at this point, but the founder described them as household names.

“More are lined up to come on board this month,” she said.

Taxi got a boost in May last year when Sam Stubbs’ KiwiSaver provider Simplicity took a 19% stake.

“It helps fill a serious hole in affordable lending to SMEs,” Stubbs told the Herald.

In September last year, Taxi (with its sister company Tax Traders) won the Overall and Small Business categories in the Best Places to Work Awards.

And last week, Taylor was named as a nominee in the 2025 Hi-Tech Awards in the Inspiring Individual category.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.