More support for small businesses

Anne Tolley

SMALL and medium-sized businesses are the backbone of our communities. With 97 percent of all New Zealand enterprises employing 20 or fewer people and around 80 percent of Gisborne businesses employing no more than five people, it is vital we continue working to reduce the financial and time burdens that small businesses face.

That’s why the Government has cut ACC levies, and introduced 90-day trials and a starting-out wage. It’s why we fund the roll-out of faster broadband so more businesses are able to work flexibly and in ways that suit them.

These measures all add up to a simpler and easier way to do business — which gives small businesses the confidence of a solid platform that supports them to grow. But there is always more to do.

Recently the Prime Minister announced that Budget 2016 will include a tax package aimed at making business easier for small and medium-sized business operators.

The package will make paying tax easier and more certain, will reduce the burden of interest and penalties and will assist smaller businesses to better tailor payments to their own circumstances.

Provisional tax is being reformed with a new pay-as-you-go option to provide smaller businesses a way to pay tax as they earn from April 1, 2018. Rather than estimating what your likely tax bill is in advance, small businesses will be able to pay in three instalments over the course of the year.

It will also allow for better use of accounting software, which will calculate your taxable income and prompt you to make the right payment directly through the software, generally at the same time as you pay GST.

This will be hugely beneficial for our businesses, particularly our farmers who may not be able to anticipate changes that affect their income, such as reducing stock numbers ahead of El Nino weather.

Use-of-money interest will be eliminated or reduced for the vast majority. Contractors will be able to choose a withholding tax rate that suits their needs and the ongoing 1 percent monthly penalty will be scrapped from April 1, 2017 for new debt.

Building a more productive and competitive economy is a priority of the National-led Government. We want businesses to focus their energies on building their businesses, not navigating red tape.

These changes will save businesses more than $180 million over four years and help us with our plan to grow our economy and increase wages and employment.

To find out more, and to provide comment on the proposals before they take effect, visit: www.makingtaxsimpler.ird.govt.nz. Submissions are requested by May 30.