Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


SMEs in particular stand to benefit from tax proposals

13 April 2016

SMEs in particular stand to benefit from the latest tax proposals

Chartered Accountants Australia and New Zealand (CA ANZ) has welcomed latest proposals to simplify tax for businesses.

CA ANZ’s New Zealand Tax Leader Peter Vial said the package of proposals released today will generally benefit businesses and employers, particularly small and medium-sized businesses (SMEs), by reducing compliance and real costs.

“Many of the proposals are aimed at making tax law and administration fairer and more certain for taxpayers. Others are aimed at simplifying the current rules.

“As the Government acknowledges, SMEs bear relatively higher tax compliance costs and the proposals will remove some of that burden.”

‘Use-of-money’ interest rules relaxed

This included reducing ‘use-of-money’ interest costs.

Vial particularly welcomed the proposal to impose ‘use-of-money’ interest only from the third provisional tax date (and not from the first and second dates) for provisional taxpayers who use the standard provisional tax calculation method (the so-called uplift method).

“This change is projected to take 67,000 taxpayers out of having to pay ‘use-of-money’ interest.”

New provisional tax method

Vial said one of the more ambitious proposals was to introduce from 2018 a new method for calculating provisional tax – the ‘accounting income’ method – which will effectively allow business taxpayers to pay tax as they earn income.

“Taxpayers who have volatile or lumpy income are likely to elect to use this method. It is good to see that, like many of the proposals, it will be optional for businesses.”

Improvement to penalty rules

Vial said CA ANZ, which represents 29,000 members in New Zealand, was pleased to see recognition that some of the penalty rules were not achieving their objectives and were, in some circumstances, unduly penalising taxpayers who were generally compliant.

“The proposal to remove the 1 percent incremental monthly late payment penalty is sensible.”

The Issues Paper says the removal of this penalty will reduce the combined effective rate of interest and penalties in the first year of a taxpayer’s debt from 27 percent to 15 percent.

Vial said this was “much more in line with commercial rates”. The initial late payment penalty and interest will continue to apply.

Review of withholding tax rules

“It is timely that government is looking at the withholding tax rules, which are in some respects too narrow and out of date. Again optionality is a feature of the proposals.”

He said detail of the new rules will be the key.

Sharing tax debt information

The proposal to allow Inland Revenue to share tax debt detail with credit reporting agencies was quite a fundamental shift, Vial said. “The new rules will need to be robust and administered fairly.

“Creditors and suppliers are likely to welcome the proposal, but the balancing of their interests with the privacy interests of taxpayers in debt will need to be managed very carefully.

“The package is a strong step in the right direction. That said, there is significant scope for further tax simplification in conjunction with Inland Revenue’s Business Transformation programme.”

Vial said CA ANZ was looking forward to continuing to contribute its ideas as the Government and Inland Revenue make further progress on making tax simpler.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>


OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>

NIWA: 2020 - NZ’s 7th-warmest Year On Record

The nationwide average temperature for 2020, calculated using stations in NIWA’s seven-station temperature series which began in 1909, was 13.24°C (0.63°C above the 1981–2010 annual average). New Zealand’s hottest year on record remains 2016, when... More>>

Quotable Value New Zealand: Property Market Set To Cool From Sizzling To Warm In 2021

Nostradamus himself could not have predicted the strange series of events that befell our world in 2020 – nor the wild trajectory of New Zealand’s property market, which has gone from “doom and gloom” to “boom and Zoom” in record time. Even ... More>>