Busi­nesses ques­tion value of flag­ship tax re­form

The Dominion Post - - Business - TOM PULLAR-STRECKER

The In­land Rev­enue Depart­ment is open for busi­ness after mi­grat­ing more of its tax-gath­er­ing sys­tems onto new soft­ware.

How­ever, there are claims one big change brought about the new tech­nol­ogy may prove a bit of a fizzer.

The tax depart­ment closed its con­tact cen­tres, shut down its on­line ser­vices and closed its of­fices to the pub­lic for four days while it man­aged the switch – which was a key stage in its $1.5 bil­lion to $1.8b Busi­ness Trans­for­ma­tion pro­gramme.

Spokesman Baden Camp­bell said the switch-over went well and all its ser­vices had re­opened as planned yes­ter­day morn­ing.

One of the key goals of this stage in the trans­for­ma­tion project has been to pro­vide a new way for busi­nesses to pay tax, called the Ac­count­ing In­come Method (AIM).

AIM will let busi­nesses that turn over less than $5 mil­lion a year, and which use ap­proved ac­count­ing soft­ware from MYOB, Reckon or Xero, pay tax on their prof­its on a ‘‘PAYE’’ ba­sis through­out the year if they choose – ei­ther monthly or every two months.

That is as an al­ter­na­tive to hav­ing to fore­cast up to a year in ad­vance how much tax they should pay through pro­vi­sional tax.

In­land Rev­enue said it wouldn’t know un­til later this month or May how many busi­nesses would take up the AIM op­tion.

How­ever, some tax and ac­count­ing com­pa­nies are fore­cast­ing the take-up will be low – partly be­cause of sep­a­rate rule changes to the pre­vi­ously-hated pro­vi­sional tax sys­tem that have made it less oner­ous.

Matthew Shall­crass, a busi­ness direc­tor at ac­count­ing firm Staples Rod­way in Christchurch, said that of more than 4000 cus­tomers, only one had asked for ad­vice about us­ing AIM, and had de­cided not to use it.

An­other com­pany, Tax Man­age­ment NZ, said in a blog post that AIM would in­volve more red tape for most small busi­nesses than pay­ing pro­vi­sional.

That was de­spite In­land Rev­enue and ac­count­ing soft­ware firms pro­mot­ing AIM as ‘‘the best thing since the in­ven­tion of re­frig­er­a­tion’’, it said.

Tax Man­age­ment NZ chief ex­ec­u­tive Chris Cun­niffe said changes to the pro­vi­sional tax sys­tem meant 67,000 small and medium-sized tax­pay­ers no longer risked pay­ing penalty in­ter­est on prof­its that they hadn’t fore­cast under the pro­vi­sional tax sys­tem, so long as they paid the tax that was due on time.

In­land Rev­enue pro­moted AIM as "the best thing since the in­ven­tion of re­frig­er­a­tion".

Tax Man­age­ment NZ

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