1 September 2010

Media Advisory

Report on SME compliance is a step in the right direction

The Minister of Revenue and his Department deserve full credit for studying SME compliance costs, although concerns remain that costs are disproportionately high, according to New Zealand Institute of Chartered Accountants (NZICA) Tax Director Craig Macalister.

"Studying tax compliance costs assists Inland Revenue's understanding of the impact these costs have on the business community and provides very useful information to aid the tax policy process. It also compliments the work that Business NZ and KPMG do on compliance costs," said Mr Macalister.

Inland Revenue's report stated average compliance costs had dropped 1.3% from 2004 to 2009. However, this is within the margin of error and really says that compliance costs, if anything, remain static.

"This news is underwhelming after a succession of Government-driven initiatives aimed at reducing compliance costs," says Mr Macalister. "It suggests that the current administration system and basis for taxing small business is as good as it is ever going to be in keeping costs for small business to a bare minimum."

Compliance costs for businesses with up to five employees were $6,700 per employee in 2009. This remains significantly higher than the costs faced by larger businesses.

In NZICA's view, if Government is committed to compliance cost reduction, it needs to adopt a new approach which moves away from its "one size fits all" model to one specifically designed for small business that has simplicity as a key design feature.

"NZICA urges Government to continue investigating tax compliance costs for small businesses and to use this intelligence to inform their approach to future tax reform."

ENDS

© Scoop Media