KEY POINTS:
Company compliance costs have fallen but with the burden from new schemes like KiwiSaver hitting employers they could soon bounce back up, says Business NZ chief executive Phil O'Reilly.
A compliance cost survey by Business NZ and KPMG showed that the annual cost burden for small companies with less than 10 employees was $2400 per person, down from an average of about $3000 last year, while larger companies with more than 50 staff faced costs of $780 per person, down from just under $1000 last year.
"I think you'll see next year it's entirely possible that those compliance costs won't drop any further, in fact they'll go up again because of some really poor policy in the KiwiSaver space," O'Reilly said.
The Government had ambushed employers in May's Budget with plans for compulsory employer co-contributions, he added.
"That goodwill I think from employers has in many cases gone away, not because they don't want to help their employees out but because the Government changed the rules at no notice," O'Reilly said.
"The apparent sop to business was that there was going to be some tax relief for employers for the first three years while they got used to the idea."
Tax came top of the priority list for the 1334 respondents at 43.5 per cent, followed by the Health & Safety in Employment Act, Employment Relations Act, ACC and the Holidays Act.
Companies said tax structures were too complicated, with too much time spent calculating GST and PAYE, preparing provisional tax payments and accounts for tax returns.
KPMG tax partner Paul Dunne said tax compliance was set to become more onerous.
"There is a significant compliance cost burden imposed by KiwiSaver and this compliance cost spike can be expected to continue as employers make KiwiSaver-related changes to their employment terms," Dunne said.
Fringe benefit tax continued to feature as a compliance problem in spite of amendments to rules last year, he added.
"This highlights the need for [fringe benefit tax] to be limited to real and substantial benefits in place of salary and wages, like motor vehicles and low interest loans," Dunne said.
O'Reilly said parts of the Holidays Act that weren't working had been introduced in opposition to the views of employers. The biggest Holidays Act compliance issue related to the change in how statutory holiday pay was calculated for some employees.
"If there's no consultation or if the consultation is ignored, that's where compliance problems are likely to occur," O'Reilly said.
It was good that costs had come down this year but Government activity was "pretty lumpy", he said.
"You see some stellar performers where people have taken compliance seriously.
"But many Government departments I don't think [are] really taking it very seriously."
The Companies Office came top of the helpfulness list for the fifth year running, followed by NZ Customs Service and the Department of Labour.
The NZ Immigration Service was found to be the least helpful Government department.
"The challenge is to get all Government departments doing something and that I think will drive it lower much quicker,"O'Reilly said.
Cost of compliance
Results of Survey 2007:
* Cost burden on companies has fallen.
* Tax was the top priority for businesses.
* Companies Office was voted most helpful.
* KiwiSaver could see costs rise again next year.
