New business-friendly tax package well received by many
The Government’s new business-friendly tax package proposes to simplify tax and compliance costs for small businesses. SMEs make up about 97% of NZ businesses; this is typical of Tauranga's business landscape. The changes are part of a wider business transformation programme which will support the use of new technology and make it easier to deal with Inland Revenue.
The Government has signalled it intends to fast track these changes with an implementation date of 1 April 2017, for the majority. The balance is intended to be implemented by 1 April 2018 so watch this space.
While the proposals will not suit all taxpayers, many have been well received and will help business owners reduce their compliance costs and make the process of paying tax easier. Here are some positive changes many Tauranga businesses will welcome:
An increase of the current safe harbour threshold to $60k for use of money interest for individuals and an extension of the threshold to include Companies and Trusts. This will benefit many Tauranga small businesses that, in the past, may have been subject to UOMI charged by the IRD in excess of 9%.
Removing UOMI for the first two provisional tax instalments for all taxpayers who use the standard uplift option, as long as payments required under that option are made by the due date.
Introducing the accounting income method of calculating provisional tax – by using the information generated in a taxpayer’s accounting system, such as Xero, to determine how much provisional tax you owe. As more Tauranga businesses adopt cloud accounting technology, this method is bound to win favour among Bay business locals.
There is nothing more constant than change – especially in business. Talk to us to learn more about upcoming tax changes affecting your business and how you can make the most of them.