Two-into-one plan lightens the load for small businesses

By ELLEN READ

The Government is looking at reducing the number of tax payments small businesses have to make by combining provisional tax and GST payments.

This would lower the administrative burden on businesses and help smooth their cash-flow cycle.

"It's a positive move," said Staples Rodway senior tax partner Roger Thompson.

"In theory it should mean they're paying their tax in proportion to what they're earning at the time."

Yesterday's Budget announced a range of proposals for small and medium-sized businesses.



The tax initiatives centre on a discussion document, to be issued in August, on how to ease some of the burden small businesses face when they become employers.

Ways of simplifying fringe benefit tax multi-rate calculations are also being examined.

Small Business Minister Paul Swain and Finance Minister Michael Cullen said the Government was also looking at an option to reduce the common problem of new businesses getting into financial difficulties in their second and third year of trading when tax payments for the first two years of business started falling due.

Roger Thompson said the proposal was short on details.

"I can only assume it means the Government will make them pay their tax quicker, perhaps in the first year, which wouldn't be very helpful."

Swain and Cullen said the Budget recognised the contribution and potential of small and medium-sized businesses by allocating an extra $1.84 million for this financial year and $960,000 a year in subsequent years.

The money will pay for a summit in February at which the Government will outline the initiatives it is taking to help small businesses.

It will also pay for the establishment of a Small Business Advisory Group to give advice to the Government and the Ministry of Economic Development.

Plans were announced for an advisory service for small and medium-sized businesses to help with employment relations and occupational health and safety.