Govt announces tax measures to help businesses

The government today announced a series of tax changes aimed at making it easier for small and medium businesses to manage their cash flows and to meet tax obligations. The main changes are:

• From 1 March 2009, use of money interest rates for underpayments of tax will be reduced from 14.24% to 9.73%. The rate for overpayments will go down from 6.66% to 4.23%. The changes were made by Order in Council earlier this week.
• The 5% "uplift" for estimating provisional tax will be removed, reducing the size of tax payments that most businesses have to pay. The changes will be included in a bill that is expected to be introduced next week and, once enacted, will apply for the 2008-09 and 2009-10 income years.

The forthcoming bill will also include adjustments to numerous tax thresholds designed to relieve pressure on cash flows and lower compliance costs. They include raising the GST payments basis threshold from $1.3 million to $2 million, raising the PAYE once-a-month filing threshold from $100,000 to $500,000, raising the FBT annual filing threshold from $100,000 to $500,000, and raising the GST registration threshold from $40,000 to $60,000. Details of the proposed legislative changes will be published here when the bill is introduced.

For more information on today's announcements, see www.beehive.govt.nz.