KEY POINTS:
The first pieces of the Government's Jobs and Growth Plan were announced this morning.
The changes aimed to allow business to hold on to money longer but also make returns easier.
Main tax changes are:
* Reducing from this year until 2010 the size of provisional tax repayments business have to make. At the moment business have to factor in 5 per cent growth but that will be dropped for those years. Transitional provisional taxpayers rates reduce by 5 percentage points also.
* The charge for underpayments reduces from 14.24 per cent to 9.73 per cent. The rate for overpayments will reduce from 6.66 to 4.23 per cent.
* The GST payments threshold will be raised from $1.3 million to $2m. That means more businesses will only have to file an account for GST when payment from invoices is actually received.
* The GST registration threshold will be raised from $40,000 to $60,000.
* Businesses with $10,000 or less of business-related legal expenditure will be able to fully deduct the expense in the year it was incurred, whether it was capital spending or not.
* The PAYE monthly filing and payment threshold will be raised from $100,000 to $500,000, allowing more employers to file PAYE returns and pay once a month instead of twice.
* The fringe benefit tax (FBT) threshold will be raised from $100,000 to $500,000 allowing more employers to file returns and pay annually instead or quarterly.
* Fewer businesses will have to return FBT on minor benefits when the value of minor fringe benefits that can be provided to employees without attracting FBT is raised from $200 to $300 per quarter per employee and from $15,000 to $22,500 a year per employer.
* The FBT interest rate for low-interest, employment-related loans will be lowered from 10.9 per cent to 8.05 per cent.
* Some other thresholds, relating to accrual expenditure adjustments, (such as for certain prepaid advertising/travel/lease costs) will also be raised.
* Some changes to simplify tax that are part of a bill already before Parliament will be fast-tracked.
Changes that need to be enacted will be included in a taxation bill and be effective from April 1 or the 2009-10 income year. The changed provisional tax penalties will be effective from March 1 and the new FBT rate for loans will play from the start of this year.
Click here for a Government fact sheet explaining how the changes will work.
Other non-tax related changes include:
* Beefed up assistance for business including an enhanced 0800 help line operating 24-hours a day; free business health checks and a mentoring service.
* Changes to the Disputes Tribunal aimed at reducing the amount of time small businesses spent in District Court battles. The claim levels of $7500 and $12,000 would be increased to $15,000 and $20,000.
* The export credit scheme will be changed to give greater access to short-term trade credit insurance, which is used as a guarantee to banks that an exporter will be paid.
Previously the scheme only provided money for contracts with payment terms of more than a year but shorter periods will now be able to be covered. This means exporters will not have to turn down orders because of a lack of short-term credit insurance.
* The Government has directed and the State Services Commission has agreed to pay bills promptly or early to help small and medium businesses with cash flow.
- NZPA
