MYOB gives tick for Budget’s impact on SMEs
26 May 2016
MYOB gives tick for Budget’s impact on SMEs
Leading accounting software provider MYOB says the National Government’s eighth Budget will have a positive impact on New Zealand small and medium sized businesses – but there is more work to be done to reduce the tax burden on SMEs.
“MYOB is pleased with the Government’s ongoing recognition of the important role that SMEs play in driving the New Zealand economy, especially in light of the impact of the dairy downturn,” says MYOB General Manager James Scollay.
The Budget includes a $187 million SME-friendly tax package that will change how small businesses pay provisional tax. When the new pay-as-you-go system comes into effect, it will mean a business with less than $5 million annual revenue will be able to pay provisional tax directly through their cloud accounting platform, which will calculate the amount owing based on real time analysis of the business’ cashflow and expenses.
“Paying provisional tax is a massive pain point for small business owners. The tax changes outlined in pre-budget announcements and reiterated today will be welcomed by the more than 110,000 businesses that could be eligible,” says Mr Scollay.
“MYOB conducts regular research into what policies small business owners would most like to see addressed to help them succeed. Simplification of provisional tax rules always comes out on top of the wish list for businesses, so it’s great that the Government is responding to that feedback.”
The latest MYOB Business Monitor research of more than 1,000 local SMEs, conducted for MYOB by Colmar Brunton, saw 83 per cent of businesses identify “simplification of provisional tax rules and processes to make it easier for businesses to accurately determine and meet their tax obligations“ as the government policy most important to their operation.
The package also eliminates or reduces use-of-money interest for most taxpayers, allows contractors to more easily choose a withholding tax that suits their business and stops the ongoing 1 per cent monthly penalty for late payments.
“Business will also welcome the additional $857 million investment in Inland Revenue’s new tax administration system. It will give businesses more ability to manage their tax affairs online, saving them time and money.
“MYOB is engaged with Inland Revenue on ways to make business administration simpler and easier. Advances in our ability to provide up-to-date information about cashflow and costs in a business means that we can start to build new tools in our cloud-based platforms to make paying tax a whole lot easier.”
MYOB has for a long time called for a reduction to the company tax rate and expressed disappointment that the Budget did not contain measures to reduce the burden on small businesses.
“In the most recent Australian budget we saw its Government introduce a lower tax rate for small businesses. We’d like to see the New Zealand Government follow suit so that our businesses remain competitive against those across the ditch,” says Mr Scollay.
From July, the small business tax rate in Australia will be lowered to 27.5 per cent for small businesses with less than $10 million annual revenue. New Zealand’s company tax rate is 28 per cent for all businesses.
“In addition, Australian businesses with turnover less than $10 million have access to an instant write-off for purchases of equipment valued at $20,000 each. This has proven to be a massive shot in the arm to local firms who invest in new plant and equipment.
“The Government is to be congratulated for managing the books into a healthy position. With increasing surpluses on the horizon, we’d like to see a focus on reducing tax costs on small businesses so they are in the best position to succeed,” says Mr Scollay.
Other initiatives of interest to SMEs include:
• $761 million for an Innovative New Zealand package that includes:
o $411 million in additional funding for investment in science and innovation over four years (total investment to $1.6 billion a year by 2019/20)
o $257 million for more tertiary education and apprenticeship programmes
o $94 million for regional economic development support
• $115 million for the Accelerated Regional Roading Programme for projects in Gisborne, Marlborough and Taranaki, as well as $190 million to support KiwiRail
• Additional funding for tourism infrastructure, including $25 million to upgrade the New Zealand Cycle Trail, and $12 million to help communities build smaller-scale infrastructure projects