The Government on Wednesday will announce its next plan to help the New Zealand economy grow its way out of recession. The emphasis will be on ways to help small to medium-sized businesses. Business Editor Dene Mackenzie looks at some of the options.
If small and medium-sized businesses could write their own wish lists for the Government to implement as soon as possible, then removing compliance costs would be at the top.
Battling red tape and bureaucracy takes hours out of the working week of some owner-operators.
Successive governments have promised they would cut red tape, reducing the amount of form-filling, but still the list of information to collect for the Government grows.
Polson Higgs Christchurch tax associate Brian Clarke said he often saw enthusiastic people keen to get started in business.
They knew their trade well and were realistic about their prospects.
"Once we start talking to them about provisional tax, PAYE, ACC, fringe benefit tax, student loan deductions, KiwiSaver and other things they need to do, they freak out and say: 'Its too hard'. They feel they don't get any time to get their work done.
"Compliance costs are always a big issue. They are always there and meeting requirements does take time and effort but now it has become critical."
If businesses lost staff and did not replace them, the forms were still there to fill out.
It just meant the business owner probably had to take on that role as well as ensuring the business kept operating, he said.
Deloitte Dunedin tax partner Steve Thompson was encouraged the Government was seeking to help small and medium-sized businesses which were in danger of sinking under the weight of bureaucratic regulation which had increased significantly in the past 10 years.
It was always a question of balance between too much regulation and too little.
"At present, the pendulum has swung too far in favour of rules for everything at the expense of a commonsense approach that on one hand protects employees' rights, public good and health and safety, but on the other hand allows small businesses to get on with what they are good at - running efficient businesses selling or manufacturing products as part of a productive economy."
Everyone wanted to see increases in productivity from businesses, not barriers established by regulatory authorities that frustrated and limited the chances of those small businesses making a contribution to the economy, or stopped people going into business because the compliance burden was overwhelming.
The previous government introduced the Taxation, International Taxation, Life Insurance and Remedial Matters Bill which lapsed with the election.
Mr Clarke said the Bill had been reinstated and there was the glimmer of hope that, if passed, help would be forthcoming for businesses.
One of the main parts of the Bill was the proposal to lift the turnover threshold for filing six-monthly GST returns from $250,000 to $500,000 from April 1.
That could reduce compliance costs significantly if GST returns dropped from 12 or six a year to just two.
A simplification of the rules for entertainment expenses, the deductibility of legal fees for advice in buying a major asset and simplifying GST invoice requirements, or not having to file receipts for lower priced items, would all help.
Mr Thompson wanted the Government to consider the simplification of tax payments as, so far, the recent payment date changes were an "unmitigated failure".
Businesses with a March balance date were having to pay tax on January 15 when many were on holiday.
There also needed to be much better rules for accounting compliance so small and medium-sized businesses did not get caught up in the time and expense of complying with international accounting standards which added significant cost but no benefit, he said.
