It is easy to bash the tax system. No one likes paying taxes and getting your books in order isn't fun for lots of small businesses.
It is interesting then, that the New Zealand tax system rated pretty well in a recent study.
PwC ranked this country 22nd out of 189 in terms of the ease of tax payment.
The study worked by taking a case study company and assessing the time it took to prepare, file and pay its taxes.
It included the number of taxes the company had to pay, methods and total tax liability as a percentage of its profits.
On average, the case study company took 264 hours to comply with its tax obligations, and made 25.8 payments with an average total tax rate of 40.9 per cent.
Compared to a year earlier, those averages had dropped for total tax rates, time to comply and the number of payments.
In the New Zealand tax system, the business took 152 hours and made eight tax payments with a total tax rate of 34.4 per cent.
New Zealand places itself well as a place where it's easier to pay and file taxes. This gives confidence to overseas businesses and investments from overseas as a result.
In my experience, administration of tax is not usually as important for companies as tax systems or the tax rate. Large companies are generally drawn to a particular place as a base by a lower corporate tax rate.
But the study found that how attractive an economy was to operate in was also linked to less hours spent on compliance.
This is a good thing; it means the governors of our country can focus on how to improve the economy.
However, those countries that have reduced the administration of taxes are more likely to challenge tax affairs through an increase in audits and interpretations of tax law.
Although it won't be the only reason why overseas companies will move here, it's satisfying to know that we are posting some benefits and progress to our tax system to continue a transition to an ease of business approach in New Zealand.
The study suggested that post filing processes were in most need of improvement by tax collectors, whether that was aspects of service, information access or audit procedures.
With further changes in technology such as access to fibre, the cloud and the Inland Revenue continuing its system upgrade we will continue to see efficiency gains.
Jeremy Tauri is an associate at Plus Chartered Accountants.
Phone: (09) 438 3322
Fax: 438 8455
134 Bank Street, Whangarei
If we had to sum up Brent and the team at Plus CA it would be - humorous, efficient, professional with a real focus on making your money work to its best ability for you...we will continue to deal with them even though we are moving overseas as we know they have our best interests at heart.
Jeremy thank you for your patience, assistance and general chit chat over the years. I would have absolutely no issue in recommending your services to everyone and anyone – in fact, I do.
We recently employed Jeremy Tauri of Plus Chartered Accountants and have been thrilled with the improved service we have received. Jeremy is really approachable and always available to answer queries. At his instigation we have set up quarterly meetings so that we are regularly reviewing our business and avoiding any ‘end of year surprises’.