KEY POINTS:
Moves to reduce tax compliance costs were unlikely to have a significant effect on businesses' overall compliance burden, say tax experts.
Finance minister Michael Cullen and revenue minister Peter Dunne yesterday said legislation to be introduced to Parliament next month would reduce tax-related compliance costs and remove tax impediments to the offshore expansion of New Zealand businesses. The changes were aimed primarily at small and medium-sized enterprises.
Main changes include:
* The PAYE once a month filing and payment threshold would be raised from $100,000 to $250,000. This aimed to allow small- and medium-enterprise employers to file and pay deductions once - instead of twice - a month.
* The fringe benefit tax annual return filing threshold would rise from $100,000 to $250,000. Annual filing for companies with few shareholders would be available if their FBT liability rose solely from provision of up to two vehicles to shareholder-employees. The changes would increase the number of employers that could file and pay the tax annually, rather than quarterly.
* The GST registration threshold would rise by $10,000, to $50,000.
* The GST six-monthly return would double to $500,000 which would allow more taxpayers to file returns on a six-monthly basis, rather than two-monthly.
Keith McArley, managing partner accounting and advisory for Deloitte, said the proposed change only dealt with a small part of a business' overall compliance cost.
"It helps, but it's long overdue. It's taken too long to get this, and I think they need to take a harder look at some of the non-tax cost of compliance as well."
Costs such as resource management and occupational health and safety have not been addressed.
"It's still a paper nightmare and it's still a nightmare for SME businesses."
Business NZ chief executive Phil O'Reilly said: "It's welcome but it's not earth-shattering. The bigger use to those businesses that the Government wants to target would have been if the Government had actually dropped the top personal tax rate. Many of those businesses are unincorporated and are therefore paying tax at that top personal tax rate."
The bill, to be introduced next month, would also include changes to international tax rules, including the pre-announced tax exemption of income from operations in Grey List countries that New Zealand law singles out as having similar tax systems. '
Australia, Canada, Germany, Japan, Norway, Spain, the United Kingdom and the United States are currently Grey List countries. Under the new rule, only Australia falls under that definition.
Deloitte tax partner Greg Haddon said the change would inadvertently remove a compliance cost saving for some firms.
"A lot of our existing businesses are already in these eight countries, and suddenly their compliance costs are going to go up because now they don't get that full exemption they would have had before."
