Tax change boon for NZ's small businesses

A tour of Hawke's Bay businesses by the Small Business Development Group galvanised its resolve to lobby for what is the biggest tax shakeup for small-to-medium businesses in decades.

The Development Group reports to Small Business Minister and Tukituki MP Craig Foss, who made the pre-Budget announcement last month. Small businesses will be able to pay provisional tax using their accounting software, a pay-as-you-go change from forward estimates and advance payments.

Mr Foss said the Hawke's Bay visit "reconfirmed what everyone had been saying".

"They saw it from the sharp end of people like themselves in business. Almost a unanimous issue that came up was the hassles around provisional tax - terminal tax too - and the time they had to spend doing it, guessing what their income might have been and penalties if they got it wrong, etc," he said.

"Provisional tax and compliance about taxation is the number one hassle for all small businesses, startup businesses, medium-sized businesses raise in whatever forum you are in."

New systems would remove anxiety and save many thousands of hours' toil "and let businesses get on and do what they do".

He said "the change that has allowed the change" was the upcoming IRD update of its 1992 computing infrastructure. It was built for PAYE but now handled GST, Working For Families, Student Loans, KiwiSaver and other programmes.

Development Group chairman Tenby Powell said thanks to IRD's receptiveness of the group's recommendations small businesses would no longer be asked to pay provisional tax when at their lowest ebb.

Hawke's Bay Chamber of Commerce CEO Wayne Walford said the tax change was the biggest of all Budget announcements.

"This is huge for small businesses, as provisional tax is the bane of small business owners' lives. Previously they had to guess how much money their business might make in the future and forward pay."

Xero managing director Anna Curzon said GST processes would be "enhanced" for small businesses to allow provisional tax returns at the same time as GST. "This will reduce compliance, time and effort for small business owners and align their provisional tax payment to their cash flow," she said.

NOW CEO Hamish White said small business was the engine of economic growth "and anything that makes small business easier has got to be a good thing for New Zealand's economy".