TaxBlog

The National Government has moved to enact it’s five pronged attack to help small business.

The five key measures annouced are:

1. Tax changes,
2. Expanding the jurisdiction of the disputes tribunal
3. Expanding the role of the Export Credit Office,
4. Expanding business advice services, and
5. Creating a fast-payment requirement for government agencies.

See our coverage of numbers 2 -5 below:

Key has directed Government departments to pay bills promptly

State Services Minister Tony Ryall has announced that government departments have been directed to make sure they pay their bills on time, or earlier, especially invoices from small and medium-sized business suppliers.

The Government has told the State Services Commissioner Iain Rennie it expects all departments to urgently review their process for approving and paying invoices to their suppliers, and to bring forward payment dates where possible.

Government agencies are to, at a minimum, pay their invoices in accordance with their posted terms and conditions, and in any event, no later than the 20th of the month following the receipt of the invoice.

“Government agencies are substantial customers for many small to medium sized businesses. By ensuring these agencies pay their bills on time or earlier, we can help with business cashflow.

Changes to the disputes tribunal:

“Currently, the maximum claim level of the Disputes Tribunal is $7,500, or $12,000 with the consent of both parties. To make life easier and cheaper for small businesses, the Government will lift those levels to $15,000 and $20,000.

“This change will reduce costs in up to 3,600 cases a year which will now be able to be held in the Disputes Tribunal. Previously these cases would have been held in the district court and many would not have been pursued due to the costs involved.

“This is designed simply to lighten the load on small and medium-size business so they can get on with the business of producing goods and services.”

Free Advice service for businesses has been expanded:

The assistance includes a rejuvenated Biz 0800 hotline, free business health checks, and a free mentoring service.

The advice can extend from dealing with cash flow, to management strategies, the best ways of trading through an economic downturn, and how to maximise the advantages from the range of other government initiatives announced today.

“Many of these services have been available previously in some form, but they will be of greater value now if a small business operator comes under stress,” Mr Brownlee says.

The last change relates to trade credits:

“The global financial and economic downturn has affected the availability of short-term trade credit in New Zealand, making it very difficult for some exporters – particularly small-to-medium exporters – to continue trading in some countries,” says Mr Groser.

“These new measures will help to ensure trade opportunities won’t be missed – which is crucial in the current economic environment.”

NZECO has previously provided trade credit insurance only for contracts with payment terms of more than 360 days. This will be extended to include periods of fewer than 360 days.

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Prime Minister John Key announced yesterday a raft of changes to tax and business regulations designed to cut red tape.

The initiatives, part of a wider package for small and medium enterprises announced today by Prime Minister John Key, will make it easier for smaller businesses to manage their cash flows and meet their tax obligations.

These two key initiatives are:

• Removing the 5% “uplift” rate that businesses pay in advance on provisional tax instalments throughout the year. To calculate the provisional tax they must pay in any given year, most businesses use the previous year’s income and add 5% to cover likely growth in the new income year – this 5% uplift will be removed for the rest of this year and next year.
• Reducing the “use of money” interest rates on underpaid and overpaid tax. The rate for underpayments will reduce from 14.24% to 9.73% and the rate for overpayments will fall from 6.66% to 4.23%. These changes will apply from March 1 2009.

Other tax initiatives announced today are:

• The GST payments threshold will increase to $2 million in annual revenue from $1.3 million.
• The GST registration threshold will increase to $60,000 in annual revenue from $40,000.
• Businesses with $10,000 or less of annual business-related legal expenditure can fully deduct the expense in the year it is incurred, regardless of whether or not it is a capital expense.
• The PAYE once-a-month filing and payment threshold will be raised to $500,000 in employer PAYE deductions from $100,000.
• The Fringe Benefit Tax annual filing threshold will be raised to $500,000 in employer PAYE deductions from $100,000.
• The value of minor fringe benefits (such as chocolates and flowers) that can be provided to employees without attracting FBT will increase to $300 a quarter per employee $200, and $22,500 a year per employer from $15,000.
• The FBT prescribed interest rate for low-interest, employment-related loans will fall from 10.90% to 8.05%.
• Some other thresholds for accrual expenditure adjustments will also be increased.
• Certain small and medium enterprise tax simplification measures that are part of a bill now before Parliament will be fast-tracked.

Mr Dunne said:

Taken together, the tax measures – which include a number of measures to reduce compliance costs – are worth an estimated $484 million over the next four years.

“The Government will move swiftly to introduce legislation next week supporting these announcements, so the changes are in place by April 1,” Mr English and Mr Dunne said.

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Farmers are facing higher tax bills this year according to this article from TVNZ.

The government’s “national standard cost values” (NSC), used by many farmers’ accountants to calculate taxable income, have increased by about 30% for dairy cattle and 13-14% for beef cattle and sheep.

The new livestock production costs reflected what had happened on farms during the first three quarters of 2008.

The falls in costs, which started to show up in the fourth quarter, would be taken into account in the 2010 NSC values.

I beleive the article is misleading because not all farmers use the NSC method of valuing livestock. The herd scheme which is available to most farmers ensures that yearly fluctuations won’t cause huge spikes in tax liabilites.

Anyone who has ever dealt with livestock taxation would know that it is a very confusing and complicatied area of the tax law.
 

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It seems odd to me that the very party that is seeking to raise taxes on middle America, can’t ensure their memebers pay theirs.

We reported last week about recently confirmed Treasury Secretary Timothy Geithner who failed to pay taxes he owed, even though he surely must have known he owed them. Now he runs the IRS.

This week Tom Daschle was seeking nomination to head the Department of Health and Human Services. This despite failing to pay more than $120,000 in back taxes for perks he received. Yahoo news reports”

Daschle filed amended tax returns for 2005, 2006 and 2007 to reflect additional income for consulting work, the use of a car service and reduced deductions for charitable contributions. He filed the returns after Obama announced he intended to nominate Daschle to head the Health and Human Services Department.

Most of the additional taxes resulted from unreported income from the use of a car service provided him by a close friend and business associate, Leo Hindery Jr. The unreported income for that service totaled more than $250,000 over three years.

Daschle also had unreported consulting income of $88,333, in 2007. He also had reductions to charitable contributions totaling about $15,000 over the three years covered, according to the Senate Finance Committee document. The document, marked “Confidential Draft,” is a committee statement concerning Daschle’s nomination.

News then came out that President Obama’s nominee to be chief performance officer, Nancy Killefer will withdraw her nomination following the revelation that she had a $946.69 lien on her property in 2005 for failure to pay taxes.

This makes me wonder: how did Tom Daschle get away with filing such misleading and false returns? If that happened here he would be in the IRD’s crosshairs.

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All of the latest New Zealand Tax news:

Man convicted after representing himself on tax charges.

Treasury has recommended cutting the top tax bracket.

Nelson Man jailed for tax Fraud

Pauanui Developer in fight with IRD

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