Simplifying Tax For Small Businesses

In October 2009 the New Zealand Institute of Chartered Accountants (NZICA), supported by Tax Management New Zealand Limited (TMNZ), issued a discussion paper as a think piece on what a tax system for small business in New Zealand might look like if we started with a clean sheet of paper and a mindset to lower tax compliance costs for small business.

This paper presents a modified set of proposals following feedback and discussion with business groups, tax policy officials, NZICA members and the general public. This endeavour is about presenting a constructive think piece to Government and business to raise awareness and promote thought and discussion on some fresh approaches to tackling the ever pervasive tax compliance burden for small business.

A closely-related aim is to determine whether there is a mood within policy makers and business owners to tackle tax compliance costs for small business and move to a system that has income tax and GST compliance costs proportionate to the size of the business.

We hope that this paper will generate discussion, and cause Government and Business to openly discuss whether there is a better model for the taxation of small business.

View the 2012 report
View the 2009 report
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Quote from Finance Minister Bill English [19 October 2009]

ā€œIā€™m pleased to see the New Zealand Institute of Chartered Accountants and Tax Management New Zealand proactively looking at how the tax system for small businesses could be simplified to reduce compliance costs.
They have set out two proposals:
One is for micro businesses earning under $60,000 a year and not registered for GST to pay a final tax of 15 per cent based on turnover.
The other proposal is for businesses with annual turnover of less than $1.2million to have their income tax calculated on a cash basis, based on their GST return.

I understand that a final report will be submitted to the Government next year for our consideration, after consultation with the SME sector. I believe these proposals have merit and they will not be dismissed out of hand. Tax policy officials will engage with the Institute on them.ā€