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Wairarapa MP, Georgina Beyer, is pleased the government is looking at ways of making the tax process simpler and how to help reduce stress on small business, through its discussion document More Time for Business.
"As is evident in Wairarapa - small businesses are the backbone of our business community," Ms Beyer said.
"In New Zealand 95% of employers have fewer than 20 employees, while 84% have fewer than five employees.
"As I am constantly reminded by small businesses in Wairarapa the overwhelming majority of them pay their taxes but they are concerned that if they make a mistake they will end up paying penalties and interest.
"We want to help alleviate that concern.
"We're looking at a number of proposals to make it easier for small to medium sized business to pay their taxes and stay out of that compliance and penalty trap.
"I want business people in Wairarapa to have more time for doing what they do best - running their businesses."
The main proposals relating to small businesses are:
- Provisional tax: Small businesses could pay provisional tax as income is earned, rather than paying it in three equal payments throughout the year. For some businesses this would result in a better match of cash flow and tax payments. Other proposals would reduce interest costs associated with the current system for all businesses.
- Employers and PAYE: Employers could reduce their exposure to penalties and interest by using intermediaries such as payroll firms when collecting and paying PAYE.
- End-of-year tax adjustments: Requirements associated with end-of-year income tax calculations for small businesses, such as trading stock valuations, could be reduced.
- Simplifying requirements: Other forms and processes could also be simplified. They include exemption certificates for non-resident contractors' withholding tax and the resident withholding tax certificates sent out by financial institutions.
- Benefiting from information technology: Recent advances in information technology can help to reduce tax compliance costs by reducing the need for businesses to communicate with Inland Revenue, simplifying the calculation and payment of tax, simplifying the filing of returns, and improving the administration of the tax system.
"Other proposals include helping people who receive family assistance by reducing the number of forms involved, removing complex end-of-year adjustments, and reducing the risk of their owing family support at the end of the year," Ms Beyer said.
"The discussion document builds on earlier work that resulted in most salary and wage earners not having to file income tax returns from last year.
"Proposals include extending the number of people who do not have to file a tax return, and reducing risk and compliance costs for those who have small amounts of other income to declare.
"I'm encouraging our local small business owners to take a look at More Time for Business - it's really important we get your feedback on the proposals in there because they will affect you."
The closing date for submissions is 15 June. More Time for Business is available at Bennetts Government Bookshops and at www.taxpolicy.ird.govt.nz and www.treasury.govt.nz
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