budgetbudget 2016penaltyprovisional taxTaxtax reform

One to forget ..

.. that is the 2016 Budget that we are talking about!

The budget, the 8th from Bill English, was one that kept to the same formula as the previous three .. some increased expenditure across key areas but no big projects.

For us business owners, there was sweet nothing new .. IRD are pressing ahead with their Business Transformation project and confirmation of the recent announcements by the PM around the Business Tax package.

Just to recap the Business Tax announcement, the proposals are:

  1. Reform of the Provisional tax regime with particular focus on the Use of Money regime and introduction of a new “Accounting Income Method” (AIM) which will allow for accounts information to be used to pay tax on a monthly or two-monthly basis;
  2. Schedular Payments overhaul for contractors allowing for choosing of their own tax rate
  3. Removal of the 1% 1 day late payment penalty
  4. Greater transparency with proposals to share tax debt cases to credit reporting agencies

Like any tax proposals, nothing is going to happen overnight with the significant changes not proposed until the 2019 income year. The change in the provisional tax regime could be of real benefit but like any tax changes, the “devil” will be in the detail!

We will keep you updated as the proposals come to life.