Small business start up tax discount introduced

Small business will become less taxing from tomorrow when a 6.7 per cent discount becomes available.

Associate Revenue Minister David Cunliffe said today the discount was open to many self-employed people and members of partnerships in their first year of business.

"The discount is designed to reduce some of the financial strain that small businesses face in those vital first three years of business," Mr Cunliffe said.

"When they begin paying provisional tax, often in their second year of business, people can be hit hard by having to make payments of two years income tax very close together -- one for the previous year and one for the current year. That can be a real strain."

The Government had introduced the discount to relieve this problem by encouraging people who were starting up to make early payments in the year before they begin to pay provisional tax.

"Those who choose to do so will receive a 6.7 per cent discount for each dollar of tax paid during the first year... in this way they will have less tax to pay in year two and will save money as well."

- NZPA