The SME package
National has announced a half billion package (0ver four years) of policies to help small and medium sized businesses, during the economic downturn.
There are five parts:
- a suite of 11 tax changes costing $480 million
- an expansion to the export credit scheme
- extended jurisdiction for the Disputes Tribunal
- expansion of business advice services
- a prompt-payment requirement for government agencies.
The tax changes are:
- removing the 5% increase in provisional tax over the previous year
- reducing the use of money interest rate for underpayments by 4.5%
- threshold for GST payments method (instead of accrual) to increase by over 50% from $1.3 to $2.0 million
- threshold for GST registration to increase by 50% from $40,000 to $60,000
- legal expenses of under $10,000 can now be fully expensed in the year incurred, not capitalised
- increase in threshold for montly PAYE filing increases from $100,ooo to $500,000
- FBT annual filing threshold raised to $500,000 from $100,000.
- value of minor fringe benefits to employees without attracting FBT will increase to $300 a quarter per employee from $200, and $22,500 a year per employer from $15,000
- FBT prescribed interest rate for low-interest, employment-related loans will fall from 10.90% to 8.05%.
- some other thresholds for accrual expenditure adjustments will also be increased.
- certain SME tax simplification measures that are part of a bill now before Parliament will be fast-tracked.
Other significant changes are a doubling from $7,500 to $15,000 the value of any disputes before the Disputes Tribunal, which saves having to go to District Court. Also the Government has instructed all Departments to pay their bills no later than the 20th of the month following receipt of invoice.
Also good is the New Zealand Export Credit Office (NZECO) will provide short-term trade credit insurance for exporters, as the lack of such credit insurance could have seem some exporters having to turn down orders.
There is no silver bullet amongst the changes announced, but that is because there is no magical cure. One just has to keep working away at making things better. This is why reform is not a one off thing you do, but is continual.