The NZ Institute of Chartered Accountants says the Govt’s tax review is ignoring small businesses, so it has come up with its own scheme to reduce compliance costs for SMEs, while increasing productivity through the tax base. In the first instance the Institute wants a special rate for very small businesses - those with no staff, turnover under $60,000, and which are not registered for GST. It calls these “micro businesses.”

It says these businesses should pay income tax at a final rate of 15% on business turnover. The proposal suggests payments made monthly or at any time, no filing of returns and a transitional rule for people who earn cash “under the table giving a 12 month window for people to enter the tax system - this would stop the cash under the table trade.”

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The next step is a tax plan for businesses with turnover less than $1.2m. This is designed for more established businesses but could also be used for start-ups if desired. In this scheme income tax will be calculated on a cash basis on the GST return, as an adjustment to the GST result. Like GST, income tax… will be paid every two months: there will be no year-end adjustments, no provisional tax and no fringe benefit tax. To see the full details of these proposals go to . The Institute is seeking feedback and will take final proposals to the Govt next year.

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