REDUCING TAX COMPLIANCE COST PROPOSALS
It must be an election year! The Government has released a discussion document on reducing tax compliance costs for SME’s. Suggestions for consideration include:
- Introducing simplified rules for deducting legal expenditure and entertainment expenses.
- In relation to FBT, introducing a single category of restricted private-use motor vehicles for SME’s and simplifying record-keeping requirements for private use of motor vehicles.
- Simplifying GST invoice disclosure requirements, including: changing the content requirements of tax invoices; allowing alternative documentation; and broadening the scope of shared tax invoicing.
- In relation to tax administration, allowing the correction of minor errors in subsequent returns; reviewing record-keeping periods; reviewing withholding tax exemption certificate requirements; and reviewing application of the PAYE intermediaries' subsidy.
It is intended that any legislation relating to increases in thresholds be included in a taxation Bill to be introduced in 2008. The application date for these measures would generally be from 1 April 2009, subject to this being administratively and fiscally feasible (and the Election result?).
RESEARCH AND DEVELOPMENT TAX CREDITS PROPOSALS
In December, Inland Revenue released a draft tax credit guide on the research and development ("R & D") tax credit. The legislation comes into effect from the 2008/09 income year.
The guideline (all 202 pages!!) is intended to provide assistance to potential claimants and their advisors in understanding the scheme of the new legislation. It sets out the eligibility criteria and administrative requirements for the R & D tax credit. It provides guidance, including examples, to assist businesses to understand the tax credit, assess their eligibility, claim in their income tax return and file a supporting detailed statement. Taxpayers may comment on the guideline by 8 February 2008. The guidelines can be found at www.ird.govt.nz/public-consultation.
We will provide clients with detailed information once the new R & D tax credit rules have been finalised.
BUSINESS TIP
You should now be thinking about your 2008-09 financial forecast with a view to having it in place by 31 March 2008. Preparing a forecast has many benefits - sets goals, identifies weak/strong profit areas, calculates tax payments, calculates cash flow, establishes performance benchmarks, pleases your banker, and reduces stress by increasing certainty.
Our FAST FORECASTING model is ready when you are!
Important: This is not advice. Readers should not act solely on the basis of the material contained in this report. Items herein are general comments only and do not constitute or convey advice perse. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas.
