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Inland Revenue

Tax Policy

PUBLISHED 9 September 2003

Small business research findings released

In the lead-up to the publication next week of a government discussion document on ideas for making tax easier for small businesses, the government today released market research used to develop some of the proposals. For more information see:

Hon David Cunliffe
Minister of State
Associate Minister of Finance, Revenue,
Information Technology and Communications


Easier tax for small businesses - research results

Paying provisional tax and GST together, and basing provisional tax on GST turnover, is attractive to many small businesses according to market research released today by Associate Revenue Minister David Cunliffe.

"The research represents the most extensive consultation the government has undertaken on tax compliance costs facing small and medium-sized businesses," Mr Cunliffe said.

"Small businesses say paying provisional tax three times a year does not necessarily match their cash flow. For this reason, many of those surveyed saw advantages in paying provisional tax and GST together, and basing provisional tax on a percentage of GST sales."

"Businesses and tax agents also showed strong support for the idea of new small businesses paying provisional tax in their first year of business, rather than paying tax on first-year income afterwards."

"These are some of the findings we have used to develop proposals in a discussion document aimed at making tax easier for small businesses, to be released next week."

"Recent legislative changes have dealt with other findings - such as the reported need for a more flexible system that takes account of taxpayers' changing circumstances and good compliance history, and for less severe penalties and interest."

"Likewise, improvements in Inland Revenue's call centres over the last two years and increased on-line tax services go a long way towards addressing the problem of businesses having difficulty getting information or help," Mr Cunliffe said.

The quantitative research undertaken late last year by Colmar Brunton surveyed 1611 small businesses and 400 tax agents, for which maximum margins of error were +/-2.4 per cent and +/-4.9 per cent respectively.

The quantitative survey report, "Reducing the tax compliance costs of small business", is available at

Contact: Julian Kersey (Advisor) 04 471 9116, 021 811 999, [email protected]