New Zealand’s Revenue Minister, Peter Dunne, has announced that, according
to an Inland Revenue report, small and medium-sized businesses (SMEs) are spending
nearly a fifth less time on tax matters than they did five years ago.
The report, entitled ‘Changes in SME Tax Compliance Costs 2004 to 2009:
Evaluation Report’, shows that the main contributor to reduced costs is
the 17.5% decrease in the number of hours (16.3 hours fewer) that businesses
spend on tax, especially the time spent by owners.
On the other hand, the main additional costs are KiwiSaver, which was introduced
in 2007, and an increase in the value of time over and above inflation. For
example, the value of owners' time increased 17.4% to NZD61.12 (USD42.79) in
the five years to 2009. So, whereas hours have reduced, the positive impact
of this is neutralized by the increase in value of time.
All movements, netted out, result in a reduction of 1.3% in the average tax
compliance costs for all New Zealand SMEs from 2004 to 2009. While this decrease
is relatively small, it includes the additional costs introduced by KiwiSaver.
The overall change is an average. When looked at by tax type, goods and services
tax (GST) had a moderate decrease and income tax a small one. Pay-as-you-earn
(PAYE) had a moderate increase and fringe benefit tax a large one, although
the latter started from a small base.
The level of stress, it is said, is also a useful general indicator of the
compliance burden, and stress with meeting all Inland Revenue requirements (excluding
finding the money) decreased overall from 3.4 to 3.2 (on a 7-point scale). Stress
(including finding the money) decreased in relation to provisional tax, GST
and PAYE.
The report notes that “the many changes over recent years in tax policy
and administration, whether aimed specifically at reducing the burden of tax
or where this is consequential, are designed in ways to effect small but cumulative
changes to minimize compliance costs. The reduction in time could well be the
accumulation of the many improvements over the five years. The evidence at hand
shows that this seems to be happening.”
Dunne said that, while SMEs need to meet their tax requirements, “the
more that can be done to cut the time and cost of compliance, the better”.
He added that, in the government’s opinion, “the positive changes
are the result of a government focus on minimizing compliance costs over the
past five years”.
LAWANDTAX-NEWS.COM
