Power Simon: Taxation (Business Tax Measures) Bill — Second Reading 
Power Simon: Taxation (Business Tax Measures) Bill — Second Reading 
[Volume:652;Page:1928] 
Hon SIMON POWER (Associate Minister of Finance) 
 on behalf of the  
Minister of Revenue 
: I move  
That the Taxation (Business Tax Measures) Bill be now read a second time 
. The main purpose of the bill is to ease the burden of taxes on firms’ cash flows and to make paying tax easier by reducing tax compliance costs for businesses. It is a clear fact that in the current climate many businesses are experiencing pressure on their cash flows—none more so than the smaller businesses that make up more than 96 percent of New Zealand’s business community. 
The Government recognises the impact that the current economic climate is having on these businesses and has responded with a $480 million suite of compliance-free measures. Many of these measures are contained in this bill. Others such as reducing the rates of use-of-money interest for underpayments and overpayments of tax have already been progressed by Orders in Council. 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. I know the Minister is taking the Bill Birch imitation the whole way but there is a lot of noise in the House at the moment while he is trying to deliver his speech and it is just impossible to hear him. The Leader of the Opposition has his back to you Mr Deputy Speaker and is conducting a meeting with the Maori Party. There is a lot of disorder in the House and we cannot hear this fine Minister’s contributions. 
Mr DEPUTY SPEAKER 
: I thank the member for that. I would ask members please who are not participating in the debate and who wish to have discussions to have them out in the lobbies and not within the House. Thank you for that point of order. 
Hon SIMON POWER 
: I am grateful for the intervention of the senior Opposition whip and I know that he is always watching my back. 
The proposals in this bill cover a range of provisions to allow businesses to hold tax moneys longer and to lower the cost of doing business by reducing the amount of form-filling they have to do and the calculations and payments they have to make. 
The first of these changes is the removal of the 5 percent uplift in the calculation and payment of provisional tax. Currently payers of provisional tax who use this method must use the previous year’s income tax and add 5 percent to the total in order to calculate the amount of provisional tax they must pay in the coming year. That extra 5 percent or uplift factor is based on the assumption that income will grow over the new income year. In today’s economic climate that assumption is no longer clear-cut. The bill therefore allows the uplift of the provisional tax calculation to be reduced for the current and next income years. This should help relieve some of the pressure that small businesses are facing by reducing the amount of provisional tax payments that businesses must make and in turn this will free up much-needed cash-flow for those businesses. A further proposal makes it possible for a greater number of individual taxpayers to reduce their exposure to use-of-money interest. This change was previously part of the omnibus taxation bill introduced last July but has been included in this bill to ensure its speedy enactment. 
Other changes in the previous tax bill have been significantly enhanced in this bill which also introduces some important new measures. These measures are designed to lower costs for many businesses by reducing the number of returns they have to complete the number of calculations they have to make and ultimately the number of tax payments they have to make. For example the GST payments threshold will be raised from $1.3 million to $2 million. This will give more businesses the cash-flow advantages of accounting for GST when payment from an invoice is actually received rather than when the invoice is issued. In addition the income threshold over which the GST registration is mandatory will be raised from $40000 to $60000. This will allow businesses that earn less than $60000 to opt out of the GST system should they wish so they no longer have to bear the compliance costs associated with accounting for GST. 
The turnover threshold under which businesses can make GST returns 6-monthly instead of 2-monthly will also rise from $250000 to $500000. This move will be especially welcomed by businesses with seasonally based income such as the horticulture industry. The PAYE once-a-month filing threshold will be raised from $100000 to $500000 to allow more employers to file PAYE returns and pay PAYE once rather than twice a month. The threshold under which businesses may file fringe benefit returns annually is also being raised from $100000 to $500000. Similarly the value of minor fringe benefits that employers can give their employees without attracting fringe benefit tax will rise from $15000 to $22500 a year per employer and rise from $200 to $300 per quarter per employee. This means fewer employers will have to account for fringe benefit tax in relation to minor benefits they may provide to their employees. 
Finally the bill introduces a new $10000 threshold for business-related legal expenditure. This means that if a business’ total bill for business-related legal fees in a given income year is $10000 or below the entire amount will be tax deductible without having to identify which amounts relate to non-deductible capital expenditure and which amounts are deductible revenue expenditure. Together these provisions present a package of assistance to smaller businesses that will help them to save time and money and to weather the current economic climate. 
In bringing the bill to its second reading the Finance and Expenditure Committee has recommended a small number of minor drafting changes of a technical nature. On behalf of the Minister of Revenue I wish to express my sincere thanks to the members of the committee for the cooperative and constructive way in which they have progressed this bill which I now have great pleasure in commending to the House.