On February 9th the accounting software firm MYOB Technology released the quarterly MYOB Business Monitor report, which canvases opinions of New Zealand businesses on taxation and the economy. The newly published edition of the report gauges local businesses’ views on potential election year political campaign promises.

Overwhelmingly, the report showed that business owners would support a political party which campaigned on the promise of reducing tax compliance costs for businesses, or introducing measures to ease filing burdens. Approximately 74 percent of survey participants claimed that they would support a political party which proposed to simplify provisional tax rules, specifically in regards to making it easier for businesses to “accurately determine and meet their tax obligation”. Over 61 percent of respondents stated that they are in favor of policies which would grant tax-credits to businesses which electronically file their tax returns. Waiving late-payments fees for startups was also a relatively popular option, with 58 percent of survey takers revealing that they are in favor of the policy. Summarizing the businesses’ opinions, Julian Smith, General Manager of MYOB New Zealand, said, “…the policies the New Zealand business community would support are those that would make it easier to do business in this country, invest in innovation, and provide greater employment opportunities.”

Nearly 42 percent of surveyed business owners stated that would vote for a political party that campaigned on a platform of a common economic zone with Australia, along with a shared currency. The idea was widely supported within the professional services sector, although won little praise from the rural sector, or local retailers and or business owners in the hospitality industry.

In a media statement issued by MYOB, Julain Smith revealed the least popular tax policy that could potentially be proposed during the election, saying, “…all parties would do well to steer clear of a capital gains tax. This would be a very unpopular policy, with 65% of business owners promising to vote against the party that has a capital gains tax as an election platform.”

Summarizing the survey results, Julian Smith said that political parties should scrutinize their tax and economic policies closely, as tax cuts alone might not be enough to win voters’ favor. He continued to say, “…what our research has highlighted is that Kiwi business owners are looking for a comprehensive mix of stimulus, cost reduction, and investment in growth and innovation.”

Photo by mondays child

On May 7th the New Zealand Government issued a statement revealing a 2.4 percent fall in tax revenues, compared to earlier Half-Year Update in December. The Government has revealed that it now expects tax revenues to be below previous expectations for the entirety of 2010, and perhaps also 2011. According to the statement the lowered tax revenues are due to decreased corporate income collections, and decreased provisional tax payments from individuals and source deductions. Commenting on the new results, Bill English, Finance Minister of New Zealand, said “Just two weeks out from the Budget, it underscores the brittle fiscal position faced by the Government and how finely balanced the situation is.”

According to the New Zealand Government, tax collections for the nine months reached NZD 530 million. Although, these take into account the NZD 400 million made in one-off gains from the Government’s legal action against four New Zealand banks. Provisional tax payments were NZD 309 million lower than expected. Company taxes and PAYE deductions were down NZD 349 million and NZD 537 million respectively. Although Goods and Service tax revenue is reported to have increased by NZD 314 million above forecast.

Photo by Ewan-M

As of the first of April, 2009, a number of changes are taking place in the New Zealand taxation system both in regards to business and personal taxation.

To the everyday individual, most noticeable amongst these will be the introduction of the Independent Earners Tax Credit, which will deliver a net $520 ($10 per week) to those earning between $24,000 and $44,000. This decrease at 13 cents per dollar above the $44,000 bracket. Also, the 33% marginal taxation bracket begins from $48,000. The above $70,000 earnings bracket tax is decreased from 39% to 38%.

Changes also come into effect for small and medium enterprises. Provisional tax estimation uplifts are now removed. The GST payment threshold is now at $2 million. GST registration is now set at $60,000. The provisional tax “use of money” threshold is $50,000 and the use of money interest rate has been reduced also.

The full list of changes and breakdown of tax brackets can be seen at the Beehive website, here.

The business tax relief package which was introduced by the National led Government and aimed at bringing tax relief to the small and medium enterprises (SME) of New Zealand, has been passed through parliament. According to Revenue Minister Peter Dunne, the 96% of New Zealand businesses which are SMEs will find this package useful in weathering the current economic downturn and also in easing up some cash flow problems that they might be experiencing.

If the package receives Royal assent from the Governor General, it will include changes like the removal of the 5% increase in Provisional Tax estimates, along with changes to some thresholds in Goods and Service Tax payment.

The IRD is allowing people who opt in before the end of March to use the new “ratio option” to calculate their provisional tax liability. According to the IRD this option would be most beneficial to businesses with heavily fluctuating cash flows.

The new system will be calculated based on the most recent GST return filed by the business. Subsequently, the Provisional Tax will be calculated and payment will be made six times a year, as opposed to the current three. As such, any business which has fluctuations from one month to the next might see benefit from the new system, so as to pay a more appropriate amount for their level of monthly revenue.

John Key made an announcement that he will be giving a speech on the 4th of February revealing new tax based initiatives by the Government that are aimed directly at assisting business owners. The new changes are said to focus on tax, cash flows and regulations.

Some speculation has placed possible new introductions as a reduced fee for underpaid provisional tax and alteration to the regulation which required provisional tax estimates to increase 5% above last year’s earnings.