Tax Simplification Work Welcomed By Business NZ
The Government's discussion document on tax simplification is most welcome, says Business NZ Chief Executive Simon Carlaw.
"It is a major step forward, especially for small and start-up businesses, and is an indication that the Government is taking business issues seriously.
"Some issues need further work, for example the proposals on provisional tax don't go far enough. The discussion document proposes that companies deposit their income into a bank account, with the bank paying a nominated fixed percentage to Inland Revenue on a regular basis. This would ease some of the yearly calculation burden on businesses, but it would not address the problem of the fixed percentage itself. Under normal variable business conditions, the ratio could change rapidly, so there needs to be a way of adjusting the rate during the year.
"And more needs to be done in the area of penalties. Under the current regime, many companies overpay provisional tax simply to avoid incurring high penalties for underpayment. A progressive penalty structure - with a low penalty if firms underpay in any year and an increasing penalty if they underpay on a regular basis - would stop the need to overpay.
"I would recommend all business people look at the proposals and contribute further views to build upon the extremely positive start that has been made," Mr Carlaw said.
Contact Simon Carlaw 04 4966555 or Kathryn Asare 021555744