Proposed business tax changes
In April, the government announced a package of proposals to simplify business tax, many of which will benefit small and medium-sized businesses. Some of the key tax proposals include:
- A new pay-as-you-go option for paying provisional tax for small businesses with less than $5 million annual turnover. This will give small businesses an alternative to the current system which requires three annual provisional tax payments. To take advantage of the proposal, businesses will need to use a cloud-based accounting system, such as Xero, linked to the Inland Revenue.
- Changes to the ‘use-of-money interest’ rules that govern the interest paid to taxpayers for overpayment of tax and interest charged for underpayment. The practical effect is that the changes will eliminate or reduce use-of-money interest for most taxpayers.
- Contractors will be able to elect their own withholding tax rate to better reflect their circumstances and reduce the impact of provisional tax.
- Certain penalties will be removed, including the current 1% monthly penalty for new debt. However, immediate penalties and interest charges for late payments will still apply.
New legislation is likely to be introduced later in 2016 and most of the proposals have a planned implementation date of 1 April 2017.
Smoke alarms and insulation now required for rental properties
Landlords are now required to have smoke alarms and insulation with the passing of the Residential Tenancies Amendment Act 2016 in late May.
From 1 July 2016 all tenanted properties will be required to have smoke alarms, and insulation will be compulsory in social housing from 1 July 2019.
The government says these new provisions will cover the 120,000 rental properties which do not yet have smoke alarms and the 180,000 that are uninsulated. The new legislation also covers the enforcement of existing regulations around heating, dampness, electrical safety, plumbing, sanitation and ventilation.