Significant changes in the way businesses handle the administration and payment of the goods and services tax (GST) and income tax are being proposed by the Inland Revenue Department (IRD).
A just-released discussion document outlines ways to improve the efficiency of getting information from businesses to the IRD using technology and modern payroll and accounting software systems.
IRD is suggesting that once companies enter information into their own payroll and accounting systems, they would be able to transmit that immediately to the department in real time.
A trial will start next month with a sample of businesses using Xero and MYOB accounting software to file their GST returns straight to Inland Revenue rather than having to file separately.
"This may sound simple but it has very practical benefits for businesses, cutting the amount of time it takes to meet tax obligations," said Revenue Minister Todd McClay.
A partner at advisory firm PwC, Elly Ward, said the proposals appear sensible and fair, with real benefits for businesses.
"It's going to mean there's less of a risk of errors, just from putting the wrong information in, and it's a lot quicker for businesses and hopefully a lot cheaper."
She said the department is suggesting a similar "real-time" approach for wage and salary earners, which would take into account of issues such as working for family credits and welfare benefits, which currently do not get resolved until the end of the tax year.
Ms Ward said companies with manual or simple payroll systems would have to upgrade.
She said other proposals include making businesses send income tax payments at the same time they pay staff, which might put pressure on smaller company cash flows, and producing a personal tax summary for individual tax payers at the end of the year.