I, like many others, hate provisional¬†tax. ¬†It’s annoying, it frequently wants money from you before you have actually received it from your customers, and there is a big stick that if you guess too low, they’ll come beat you up a bit. ¬†Great reward for managing your business into growth.
Tom Pullar-Strecker reports on some changes that appear to be welcome at first glance
The much-hated provisional tax system that forces small businesses to forecast their tax liability a year in advance will be overhauled, Revenue Minister Todd McClay has all but confirmed.
McClay said he did not believe the provisional tax system was “fit for purpose”.
A “business transformation” programme under way at Inland Revenue, which the department expects to cost up to $1.5 billion, could allow firms to pay tax on their income in, or closer to, real time, he said.
It would be “wonderful” if Inland Revenue could get to a point when income was taxed only when it was earned, but any changes would need to be balanced against the Government’s needs, he said.
If provisional tax was linked to being paid, more like GST, then that could be less of a burden. ¬†End of the month, tote up your total payments, cough up x percent. ¬† Read more »