17 September 2003 Media Statement
Making tax easier for small businesses
Ideas to make tax easier for small businesses are the subject of a government discussion document released today by
Revenue Minister Michael Cullen and Associate Revenue Minister David Cunliffe.
“Small businesses are a vital part of the New Zealand economy and are disproportionately affected by tax costs. Many
owners do the associated paper work themselves, outside business hours,” the Ministers said. The main proposals are:
- Helping small businesses with PAYE. To encourage small businesses to take advantage of the help that payroll agents
can give, the government would offer a subsidy to pay the associated agency fees for a certain number of employees –
say, up to five.
- Aligning provisional tax and GST payments. Provisional tax would be paid with GST, which for many businesses would
mean more frequent but smaller provisional tax payments.
- Basing provisional tax payments on GST turnover. If provisional tax and GST payments were aligned, businesses could
then choose to base their provisional tax payments on a ratio of their GST turnover. This would help match provisional
tax payments with income flow.
- A discount for self-employed people who pay provisional tax in their first year of business. Self-employed people who
make voluntary payments of provisional tax in their first year of business would be offered a 6.7 per cent discount for
each dollar of tax paid in the first year.
“The government has used the results of extensive consultation on the compliance costs facing small and medium-sized
businesses to develop the proposals,” the Ministers said.
“Each of the proposals may have advantages for some and disadvantages for others, and what may suit small businesses may
not suit larger business, so it is vital that small businesses and their advisers let us know how the ideas would work
for them.”
The discussion document “Making tax easier for small businesses” is available at www.taxpolicy.ird.govt and
www.treasury.govt.nz . Submissions close on 31 October.
ENDS