Announcements
PUBLISHED 10 February 2009

Business tax measures bill introduced

A taxation bill introduced today under urgency gives effect to several tax changes announced last week as part of a package of assistance measures for small and medium businesses. The proposed changes include removing the 5% “uplift” that businesses pay on provisional tax instalments for the 2008-09 and 2009-10 income years, and adjusting numerous tax thresholds. For more information see the media statement, our special report on the proposed legislation, and the Taxation (Business Tax Measures) Bill.


Hon Peter Dunne
Minister of Revenue
Associate Minister of Health

MEDIA STATEMENT

Dunne: Tax Bill provides relief for SMEs

Tax changes being introduced in Parliament today are an important step towards helping smaller businesses deal with the current economic pressures they are facing, Revenue Minister Peter Dunne says.

Mr Dunne will introduce the Taxation (Business Tax Measures) Bill, which is a package of relief measures aimed at helping businesses' cash flow and reducing the amount of time that small and medium enterprises (SMEs) must spend on their tax obligations.

The tax changes were announced by Mr Dunne and Finance Minister Bill English last week as part of the Government's wider package of assistance measures for smaller businesses, worth more than $480 million over the next four years.

"Because SMEs account for over 95 percent of New Zealand's businesses it's important that the people who operate them can concentrate on the things that will help their businesses weather these difficult times," Mr Dunne said.

"Improving tax cash flow and reducing the number of tax returns, payments and calculations SMEs have to deal with will go some way towards easing the tax burden they currently face, and free-up their time and money so they can focus on the important job of strengthening their businesses against the economic downturn," he said.

Measures announced by the Government and contained in the bill include:

  • The 5% "uplift" rate that businesses pay on provisional tax instalments will be removed for the 2008-09 and 2009-10 income years, resulting in better tax cash flows for the next two years.
  • The GST payments threshold will be raised to $2 million of GST turnover from $1.3 million, so more businesses will have the cash-flow advantage of only having to pay GST when payment from invoices has been received.
  • The GST registration threshold will be raised from $40,000 to $60,000 of GST turnover, allowing businesses earning less than $60,000 to de-register if they wish.
  • Businesses with business-related legal expenditure of $10,000 or less will be able to fully deduct the expense in the year it was incurred, whether it is capital in nature or not.
  • The PAYE once-a-month filing and payment threshold will be raised from $100,000 to $500,000, allowing more employers to file PAYE returns and pay PAYE once instead of twice a month.
  • The FBT annual filing threshold will be raised from $100,000 to $500,000, allowing more employers to file FBT returns and pay FBT annually rather than quarterly.
  • The value of minor fringe benefits, such as chocolates or flowers, that can be provided to employees without attracting FBT will be raised to $300 per quarter per employee, and to $22,500 a year per employer. This means fewer businesses will be required to return FBT on certain minor benefits provided to employees.
  • Certain tax simplification measures for small and medium enterprises that are part of another tax bill currently before Parliament will be fast-tracked.

The tax relief package announced last week also included reductions to the use-of-money interest rates for underpaid and overpaid tax, and the FBT prescribed interest rate applying to low-interest, employment-related loans. These changes were made by Orders in Council last week.

Further information on the Government's tax relief changes for small and medium enterprises is available in a special report at www.taxpolicy.ird.govt.nz.

Contact: Mark Stewart, Press Secretary, 021 243 6985