Verve Article - May 2016
Helping small businesses drive our economy
Prior to entering Parliament four and a half years ago, I ran my own business producing business histories and biographies. I loved it. It was very satisfying, every year or so, to deliver a book that told an inspirational story and would last forever. It was a stress-free existence, with one exception. The nightmare of provisional tax.
Anyone who has been self-employed or run a business knows the cashflow challenges of provisional tax payments, as well as the sheer difficulty of correctly predicting future profitability.
So I’m very pleased that Budget 2016 will include a tax package that makes paying tax easier and more certain for small businesses and reduces the burden of interest and penalties.
We are going to give small businesses the opportunity to choose a “new pay-as-you-go” option. This drops the estimation part and instead works out your tax payments on an ongoing basis throughout the year.
Penalties for late payment are an essential part of a tax system that’s fair to everyone. Under the proposals, the penalty that applies to late payments, and the 4 per cent penalty after a further week, will remain, as will use-of-money interest on overdue tax. But a 1 per cent monthly penalty on top, as we have now, makes the combination of penalties and interest very burdensome. This will be scrapped for new debts after 1 April 2017.
As a government we understand that it is small businesses that are the backbone of our economy. We want them to grow into big businesses, if that’s what their owners desire. That’s why we are constantly looking for new ways to reduce the burden of government and free up people to concentrate on what they do best.