The government is aiming to give small and medium enterprises a break in this year's Budget through the reduction of tax related compliance costs.
The government says SMEs represent a large part of the economy but tend to have a disproportionate tax compliance cost burden.
In an effort to reduce compliance costs, the government is raising tax thresholds which should see some businesses spend less time filling out tax returns and making fewer tax payments.
The threshold for PAYE once-a-month filing will be raised from $100,000 to $250,000, so those currently sitting between this band will be able to fill out their schedules once a month instead of fortnightly.
Fringe benefit tax, which has an annual return filling threshold of $100,000 will also be lifted to $200,000.
The GST registration threshold will increase from $40,000 to $50,000 - and the GST six-monthly return filing threshold will be raised from $250,000 to $500,00.
The legislation which will allow these changes will be introduced to parliament next month, and will also include changes to provisional tax, low-value trading stock and accounting for tax in respect of financial arrangements.
The government has also signalled that it will consider "more significant departures from the normal tax rules" as identified in consultation with businesses.
Internationally competitive
Finance Minister Michael Cullen and Revenue Minister Peter Dunne say there will also be better rules for taxing the offshore income of New Zealand businesses.
The goal is to bring New Zealand's international tax rules in line with its competitors so the country's businesses can compete more effectively in foreign markets.
Current rules mean that the tax exemption for active income from the offshore operations of New Zealand-resident businesses is confined to a 'grey list' of eight countries that have similar tax systems to New Zealand.
New changes will see the active income exemption extend to all controlled foreign companies, in all jurisdictions.
The only exception is Australia, which means that New Zealand companies setting up operations across the Tasman - usually the most convenient option for SMEs wanting to expand - will not have to pay the compliance costs of meeting the active business test.
Cullen says these changes will encourage businesses to internationalise while keeping their bases in New Zealand.
Investing in Maori Business
Maori Business Aotearoa New Zealand (MBANZ) will use $40.5 million of capital funds to provide business support and some facility loans for Maori businesses, and identify opportunites for Maori economic development.
"MBANZ will work with Maori to progress their economic aspirations, building upon and expanding their already strong place in New Zealand's economy," says Maori Affairs Minister Parekura Horomia.
