The New Zealand government will continue to provide a payroll management subsidy for a further two years in a bid to support small businesses.
Revenue and small business minister Stuart Nash said Cabinet has agreed to extend the subsidy for professional payroll intermediaries that manage an employer’s Pay As You Earn (PAYE) obligations, after the previous government decided to end the scheme in early 2018. The subsidy was introduced in 2006 as a way to encourage small businesses to use payroll service providers to handle their PAYE obligations.
"The support from Inland Revenue allows small business operators more free time in order to focus on growing and operating their business,” attested Nash.
The Inland Revenue currently provides a payroll subsidy of up to NZ$10 (US$7) per pay-run to listed PAYE intermediaries that manage the income tax obligations of eligible employers.
The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill, which is currently before Parliament, proposed repealing the subsidy on 1 April. But there was critical feedback during the Select Committee stage of the Bill, and the new announcement reflects the Committee’s latest recommendations.
"Small business owners told the Select Committee the subsidy should remain until PAYE process improvements, such as payday reporting of PAYE information, are bedded in," said Nash. "Small businesses have the least payroll capability. The subsidy allows them to outsource this task and offers a significant benefit."
The subsidy will now continue until 1 April 2020. The eligibility threshold is due to be lowered from 1 April 2019 to include businesses that pay less than NZ$50,000 (US$36,269) in income tax and superannuation obligations (PAYE and employer superannuation contribution tax (ESCT). It is estimated that around 24,000 employers that use a payroll intermediary fall into this category.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
The New Zealand government will continue to provide a payroll management subsidy for a further two years in a bid to support small businesses.
Revenue and small business minister Stuart Nash said Cabinet has agreed to extend the subsidy for professional payroll intermediaries that manage an employer’s Pay As You Earn (PAYE) obligations, after the previous government decided to end the scheme in early 2018. The subsidy was introduced in 2006 as a way to encourage small businesses to use payroll service providers to handle their PAYE obligations.
"The support from Inland Revenue allows small business operators more free time in order to focus on growing and operating their business,” attested Nash.
The Inland Revenue currently provides a payroll subsidy of up to NZ$10 (US$7) per pay-run to listed PAYE intermediaries that manage the income tax obligations of eligible employers.
The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill, which is currently before Parliament, proposed repealing the subsidy on 1 April. But there was critical feedback during the Select Committee stage of the Bill, and the new announcement reflects the Committee’s latest recommendations.
"Small business owners told the Select Committee the subsidy should remain until PAYE process improvements, such as payday reporting of PAYE information, are bedded in," said Nash. "Small businesses have the least payroll capability. The subsidy allows them to outsource this task and offers a significant benefit."
The subsidy will now continue until 1 April 2020. The eligibility threshold is due to be lowered from 1 April 2019 to include businesses that pay less than NZ$50,000 (US$36,269) in income tax and superannuation obligations (PAYE and employer superannuation contribution tax (ESCT). It is estimated that around 24,000 employers that use a payroll intermediary fall into this category.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
