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Inland Revenue

Tax Policy

PUBLISHED 2 July 2002

Compliance cost, simplification stocktake

Associate Revenue Minister Paul Swain has outlined progress in reducing compliance costs and simplifying the tax system for businesses. For more information see media statement.

Hon Paul Swain
Minister of Commerce
Associate Minister of Revenue


Compliance Cost Reduction Initiatives Well on Track

Steady progress is being made to reduce compliance costs for businesses by implementing initiatives in the discussion document 'More Time for Business' and the recommendations made by the Ministerial Panel on Business Compliance Costs, Commerce and Associate Revenue Minister Paul Swain said today.

"The tax simplification initiatives were designed to reduce the stress, uncertainty and risks for small businesses in meeting their tax obligations," said Mr Swain. "Today, ten of those initiatives are in taxation bills before Parliament and close to becoming law."

Those initiatives include:

  • making it easier for employers to employ staff;
  • allowing businesses to pool their provisional tax payments with those of other businesses and thereby reduce the amount of interest they pay to Inland Revenue;
  • businesses not having to value small amounts of trading stock;
  • raising the threshold under which a provisional taxpayer is not subject to the use-of-money interest rules;
  • increasing the number of taxpayers who do not have to file tax returns;
  • more flexibility for interest payers in the way they communicate resident withholding tax (RWT) information; and
  • simplifying family assistance entitlements and improving the way family tax credits are paid.

"Work is also being done to match provisional tax payments with cashflow. That way businesses will pay tax when they have money instead of in three large lumps that bear no relation to how they actually operate," said Mr Swain.

"Another angle of the government's approach to tax simplification is to explore ways of using electronic technology to simplify tax administration processes, and to broaden the range of electronic services that Inland Revenue provides," said Mr Swain. "The department is planning a number of new electronic services designed to make it easier for businesses to pay their tax.

"Simplification is one of the focuses of the government's forthcoming review of fringe benefit tax, which will aim to simplify and improve fringe benefit tax," said Mr Swain.

In other compliance cost reduction areas the government is making progress. "We've established a Business Compliance Costs Unit within the Ministry of Economic Development," said Mr Swain. "The Unit is dedicated to improving the standard of policy making." We have also moved forward on our response to the report of the Ministerial Panel on Business Compliance Costs, established in 2001. Around 60% of the Panel's recommendations have been implemented, or are about to be implemented.

Initiatives that have been implemented include:

  • $1 million for a number of projects to reduce the time and costs involved with consent processes under the Resource Management Act.
  • The appointment of additional judges and additional funding ($2.1m over the next 3 years) to improve administration and reduce the backlog in the Environment Court.
  • The development of a new case management regime that will allow for better prioritisation of cases and speed up the appeals process in the Environment Court.
  • $500,000 to enhance the BIZ service, and to progress a "one stop shop" for business. The additional funding will be used to improve the BIZ website, develop new publications to assist business and provide additional training for BIZ advisors.
  • The formation of a test panel comprising both employee and business representatives, formed in October 2001, to advise the government on operational issues arising from the implementation of the HSE Amendment Bill.
  • ACC now being responsible for collecting both fully-funded and tail levies, resulting in significant compliance cost reductions for employers and the self employed. Previously, IRD collected 'tail' (residual claims) levies.

We've also started the process of improving the quality of new regulation, said Mr Swain. "From April last year, all policy proposals submitted to Cabinet, which have compliance cost implications for business must include a Business Compliance Cost Statement. These complement the Regulatory Impact Statements, which sets out all the costs and benefits of regulations."

"This government is serious about reducing compliance costs for business", said Mr Swain. "We will be building on the successes of the previous two and a half years and incorporating initiatives to improve the regulatory environment for business. In particular we want to ensure we remove unnecessary barriers to innovation, competition and business performance."

Andrew Janes - Press Sec for Paul Swain - 04 4719889/021 270 9106 or [email protected]
For other releases by Paul Swain For business information from the government: [site no longer available - see Internet Archive for archived version]