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Small and medium sized businesses will find life a lot easier as a result of tax changes proposed by the Government, Wairarapa MP Georgina Beyer said today.
Ms Beyer said the changes were part of the Government's campaign to simplify tax and reduce business compliance costs and that there would be a further tax package to assist business and economic growth in the May Budget.
"We can never completely eliminate compliance costs, nor would we want to because we all have a duty to future generations to safeguard the environment. We also need to protect the health and safety of workers and people's rights to a healthy work-life balance.
"But this Government respects the initiative and courage it takes to start up a new business and values the huge contribution small businesses make to the economy and to employment. We want to do what we can to help," Ms Beyer said.
Specific changes of direct relevance to small business are:
- A subsidy for small businesses to hire a payroll agent to deal with their PAYE obligations. Once a business takes on its first employee, it receives 19 additional pieces of paper from Inland Revenue and has to send the IRD an additional 12 forms. The subsidy for up to five employees will reduce the cost of getting someone else to deal with this paperwork.
- Aligning GST and provisional tax payment dates to reduce the number of times a business has to deal with the IRD. A small business paying provisional tax and GST two monthly now has nine payment dates to remember. Under the new rules, this will be reduced to six.
- Giving firms the option of basing their provisional tax payments on their GST turnover. This will particularly help seasonal businesses better match provisional tax payments with income flow.
The Government will also simplify the Fringe Benefit Tax regime so that fewer employers will be liable.
- The private use by employees of work tools such as cell phones and laptops will be exempt, provided the tool in question costs less than $5000 and is intended to be used primarily for business purposes.
- The minimum value thresholds for unclassified fringe benefits, such as subsidised goods provided by an employer, will be increased from $75 to $200 per employee and from $1800 to $15,000 across all employees so that fewer items and fewer employers are caught in the net.
- The valuation rate on motor vehicle fringe benefits will be lowered from 24 percent to 20 percent of the vehicle's cost price.
"The proposals will be included in the tax bill due to be introduced at the end of May," Ms Beyer said.
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