SME consultant 'agrees on every aspect' of VAT revisions

Wed, Jul 30th 2014, 12:11 PM

A prominent business consultant has supported changes made to the government's recently tabled value-added tax (VAT) legislation as it relates to small businesses, but reiterated that the government needed to boost education efforts.
Consultant and business trainer Mark Turnquest said that he was "happy" with the new VAT legislation as it applies to small businesses.
"I agree with the government in every aspect of what they've done," claimed Turnquest, arguing in particular that the numerous product exemptions under the previous legislation would have been a "headache" for the food industry and other organizations dealing with VAT and VAT-exempt transactions.
Turnquest was additionally pleased that the updated legislation would allow for businesses with turnover under $400,000 to file on a semi-annual, rather than a monthly basis, and would be allowed to use cash, rather than accrual accounting, to account for their VAT expenses.
The government made a number of changes to the VAT legislation tabled last week, which were recommended by New Zealand tax experts Dr. Don Brash and John Shewan as likely to simplify and reduce the costs of complying with VAT for businesses.
"This is a better system, but this should be it," said Turnquest, arguing that the change was necessary for businesses with insufficient staff. "It will ease up the amount of activities (small businesses) have to do every month."
Earlier this week, Coalition for Responsible Taxation Co-chair Gowon Bowe stated in The Tribune that the number of small businesses registering voluntarily under VAT to seek input credits could "explode", derailing the government's earlier estimate that 4,000 firms will register.
However, Turnquest stated that he would be "shocked" if more than 1,000 businesses voluntarily register under VAT. Under the current bill, firms with annual turnover of less than $100,000 are not required to register.
Turnquest also remained concerned with the government's delayed VAT education programs, warning that a "blanket approach" to educating small businesses was not feasible.
"We need different training with respect to services, manufacturing and merchandising," said Turnquest. "We're now waiting for small businesses to be trained in VAT...so that everyone would be prepared to take on this added burden."
The government earlier claimed that VAT education efforts would begin in September.
While the consultant hoped that last Wednesday's tabled VAT legislation would remain unchanged ahead of its January 1, 2015 implementation, he was uncertain what might happen to VAT rates in the coming years.
"I'm so wary," said Turnquest. "My main concern is what will happen when we sign on to the WTO (World Trade Organization), because when we have to reduce customs duties...and VAT doesn't meet revenue projections, that's when the rubber will meet the road."

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