Extra paperwork for businesses

Press, 28 July 1989, Page 5

Extra paperwork for businesses

' Business reporters Small businesses will be hit with another wave of papei- work, and have new demands on their working capital, because of the Budget’s change in PAYE tax payments. This is one of the few complaints business commentators had last night about the Budget. From May of next year, employers will have to pay PAYE tax deductions to the Inland Revenue Department twice a month. This will also apply to withholding tax on employer contributions to employee superannuation schemes. The Minister of Finance, Mr Caygill, said the new arrangement would save the Government S4OM a year. Until now, the employer had paid PAYE to the Government in the month following that in which it was deducted. Mr Roger Taylor, of Arthur Young, Wellington, said small businesses would now have to make payments on the fifth of each month, as well as the twentieth. This is in addition to fringe benefit tax payments four times a year, GST payments, generally monthly, and company tax and provision tax payments three times a year.” At the same time, the Inland Revenue Department, now imposing penalties for late payment rigidly, will have strength-

ened enforcement and checking. Small businesses will find increasing amounts of principals’ time diverted from marketing and general managing to meet the Government’s tighter tax demands. The earlier payment will also squeeze the firms’ working capital. Sharemarket effect Market watchers were happy with the Budget’s effect on the sharemarket and capital markets. Mr Michael Sidey, of Forsyth Barr, said superannuation changes would help life companies market their packages, which would in turn mean more money for investment in the market. Mr Tim Preston, of Hamilton, Hindin, Green, described it as a “pretty soft Budget.” He praised the move to encourage research and development, spending on which had bothered many companies. But he regretted that the encouragement was through State activity, rather than a broad encouragement to the private sector as well. Mr Preston described it as a “pretty good Budget.” The drop in diesel duty of 5c a litre would help farming, fishing and transport. Mr Richard Boulton, research partner with Hamilton, Hindin, Green, said the economic policies should mean that longer-

term interest rates, such as Government stock, would continue their trend down. In trading after the Budget last evening, 11/93 stock, which was at 12.85% yield at 5 p.m., was down to 12.8%. Mr Boulton believes that over the next two to three weeks this will fall another 0.2 percentage points. However, he expects short-term interest rates to stay much as they are at present in the near future. The reduction in land tax was unlikely to help Christchurch investors and tenants weather upcoming Government revaluations of land in the city, according to one property agent. Mr Robert Brown, general manager of Robert Brown United Realty, said valuations in Christchurch had not been reviewed for four or five years, and in many cases did not show the increase in value that accompanied the property boom in the city. When the valuations were reviewed, the situation in Christchurch was likely to be "quite chaotic,” he said. In Wellington, recent revaluations had meant increases in land tax of up to’ $5 per sq ft and up to $l5 per sq ft in prime retail areas. Increases such as that in Christchurch would hit retailers in particular, who were already experiencing a downturn in business, he said.