Business New Zealand has cautiously welcomed the Labour party's provisional tax proposals.
Under Labour's plan announced today, businesses could choose to pay in installments at a tax rate they can adjust throughout the year.
Labour would also scrap late penalties for provisional tax, and raise the threshold over which it has to be paid from $2500 to $5000.
Business New Zealand chief executive Phil O'Reilly said the changes could benefit small firms.
At present companies have to estimate how much money they make during the year, and then pay a provisional tax payment to Inland Revenue, with an adjustment at the end of the year.
"For some businesses, who are in growth mode, or who suffer the loss of a big client, or seasonally activity, that can be quite tricky to work out."
Mr O'Reilly said a pay-as-you-go tax system would smooth out the cashflow and tax payments.
"That'll be very helpful for them because small firms often have cashflow troubles and that's often a cause of small business collapse."