Speech by David Cunliffe (Associate Minister of Revenue) to Tax Management New Zealand, 12 June 2003
Wellington Club, 6.30 pm
I'm very pleased to be here today, at the launch of a business that has seized an opportunity arising from the government's continuing work on simplifying the tax system for businesses.
I share that commitment and will be a strong advocate of further tax simplification initiatives, several of which are in the pipeline. One of my responsibilities, as Associate Minister of Revenue, will be to assist the Minister on the work of business compliance costs, tax simplification issues and the tax aspects of the government's Growth and Innovation Framework - all of which are related.
Simplification measures that the government is currently looking at include aligning the payment dates for provisional tax and GST; better alignment of tax payment and the income-earning process; and further ideas for making the tax side of things easier for employers.
One of the government's approaches to tax simplification is to find ways of providing opportunities for the private sector to help businesses meet their tax obligations with less stress and hassle.
Legislation enacted in March introduced two such measures, both of which involve the use of commercial intermediaries to help businesses with their tax.
One of these measures makes it easier for employers to use commercial intermediaries to help them meet their PAYE obligations. By legislating to make the intermediaries themselves legally responsible for meeting employer obligations, the government has removed a barrier that may, in the past, have discouraged employers from using intermediaries for PAYE purpose.
The other most recent initiative, which has inspired the creation of the company that has brought us together today, is the introduction of legislation allowing businesses to pool their provisional tax payments with those of other businesses, via commercial intermediaries. This has real advantages for businesses, in particular those with uncertain income.
For those of you who may not be familiar with the tax pool process, underpayments by participating businesses can be offset by overpayments by those in the same pool, reducing the under-payers' exposure to use-of-money interest. Overpayments will attract a higher rate of interest than a business would receive in dealing directly with Inland Revenue.
This should help to remove some of the worry associated with estimating payments of provisional tax - and to free small enterprises to devote more time to their core business.
I congratulate Tax Management New Zealand on being the first company to become a tax pool intermediary. This is a brand new market whose developments the government will watch with interest. It is intended to be an open and competitive one.
I wish your company the best of success in this endeavour.