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Small employer payroll subsidy set

22 June 2006

Small employer payroll subsidy set

The government’s new payroll subsidy to encourage small businesses to make use of the services of payroll agents has been set by regulation at $2 per pay day per employee.

“The subsidy is there to make the tax side of business easier for small employers, to give them more time for running their businesses,” Revenue Minister Peter Dunne said today.

“Payroll agents can free small employers from the work of managing their payroll, which involves making PAYE, child support and student loan deductions from staff wages.

“Inland Revenue will pay the subsidy to listed payroll intermediaries that carry out PAYE and related payroll functions on behalf of small employers, for up to five employees per employer. The subsidy will come into effect on 1 October.

“The cost of using a payroll agent will vary, of course, but the subsidy should go a long way towards meeting the cost for small employers.

“The payroll subsidy is part of a package of recently enacted measures designed to make tax easier for small businesses and thus reduce the costs of business.

“The package also included changes to align the payment dates of GST and provisional tax, to reduce the number of payment dates that businesses have to cope with, and allowing them to pay provisional tax more frequently if they want to, to help with their budgeting.

“Businesses will also be able to choose to base provisional tax payments on a percentage of their GST turnover, which may suit those with seasonal income.

“By handing over the responsibility for payroll work to listed agents, the owners of small businesses will gain more time for the business and be certain that deductions from staff wages are passed to Inland Revenue on time,” Mr Dunne said.

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