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Tax system changes for business taxpayers are in four key areas: higher thresholds for provisional tax obligations; axing penalties on some late tax payments; resuming depreciation on commercial and industrial buildings; and immediate deduction for low value assets.

In order by estimated impact on tax revenue, the detail of these elements include:


Commercial and Industrial Building Depreciation

Worth an estimated $2.1 billion, this will reintroduce 2 per cent diminishing value depreciation on new and existing commercial buildings, including hotels and motels.

All sectors are eligible, the change is permanent and is intended to encourage investment in business premises and decrease the cost of such premises over time. The measures appear likely to be of particular assistance to the tourism sector, which is very hard-hit by covid-19 travel restrictions.

Immediate deductions for low-value assets

Worth an estimated $667 million, business assets worth less than $5,000 can be depreciated fully in the year of purchase rather than over several years. The current asset value threshold for immediate full write-down is $500.

The $5,000 threshold is temporary and will apply in the 2020-21 tax year, reducing to a new higher threshold of $1,000 thereafter.

As well as reducing compliance costs, it is likely to stimulate the purchase of business equipment.

New provisional tax thresholds


Valued at an estimated $350m in cashflow benefits to businesses in 2020/21, small businesses will not have to pay provisional tax unless they owe more than $5,000, doubling the current $2,500 threshold.

Businesses that would have been paying provisional tax in the 2020-21 tax year will now be able to pay their tax on February 7, 2022.

Some late payment penalties written off

To apply on all tax payments due on or after February 14 2020, the Commissioner of Inland Revenue will have discretion to waive late payment interest penalty payments for taxpayers "significantly adversely affected by covid-19."