The budget’s out and accounting and business solutions provider MYOB says New Zealand’s SMEs aren’t feeling too chuffed about it.rnNew Zealand SMEs are one of the voices amongst the post-budget announcement grumblings. MYOB says some SMEs in retail and hospitality want tax relief from the government – but not the online overseas GST kind. We also look at other points of tax contention for companies, like commercial charities that operate tax free.rn
MYOB New Zealand sales manager Scott Gardiner says in the next year, SMEs will be looking to the government for more investment and more simplicity in taxes.
The company points to recent research from the MYOB business monitor survey of over 1000 local SMEs in New Zealand.
The majority (71 percent) of SMEs thought small businesses should be given tax breaks.
This call was incredibly strong from the retail and hospitality sector, where 81 percent of SMEs think the government should step up and provide tax relief.
However, online GST wasn’t at the forefront of SMEs’ tax concerns in a pre-election survey.
Interestingly, just 25 percent wanted to see GST introduced for overseas online purchases, while 36 percent were against the idea.
The tax change idea that had the most support was simplifying a provisional tax, with 67 percent in favour of the idea.
Gardiner says it’d be great if the government gave SMEs a vote of confidence by giving tax relief.
Another tax issue that could be a point of contention for businesses is charities that have a commercial arm that is tax exempt, such as Sanitarium.
A report by the New Zealand Initiative has found that the rules in place for the taxing of charities give them the upper hand over competitors.
The author of the report, Jason Krupp, says that since $16 billion flows into these charities each year, it’s essential that the public trust them.
He says there is little oversight about where tax-free money is distributed within charities.
Sanitarium spent $5.7 million to the agency, $4 million in aged care and $182.5 million on “nutritional, wellbeing and health food activities expenses” last year.
“What the rules do is create a situation where commercial groups like Ngai Tahu and Sanitarium, both of which operate under registered charitable status, pay no income tax on any profits retained within the business, potentially giving them a significant advantage over tax paying competitors,” says Krupp.
The estimated 700 companies on the Charities Register generate over $372 million in tax-exempt profits each year.
Krupp says that they don’t want for-profit arms of charities outlawed, they just want businesses to compete with other companies on a equal footing.
The report proposes that the government tax for-profit businesses owned by charities in the same way that private companies are taxed, so there’s no advantage over competitors.
Sanitarium has long been the subject of controversy for its tax-exempt status.
The Seventh-day Adventist Church in New Zealand founded the company 100 years ago to promote plant-based health foods.
Now it has many iconic food products under its belt, including Weetbix, Skippy cornflakes, Ricies and Marmite.
Euromonitor’s country report on breakfast cereals in New Zealand found that Sanitarium Health Food Co. led the charge in cereals, with an overall market value share of 31 percent.
This gives them an edge over the likes of their taxed competitors, such as Nestle and Kellogg.