Small business payroll subsidy renewed
Support for small businesses through a payroll management subsidy is to continue for a further two years.
Revenue and Small Business Minister Stuart Nash says Cabinet has agreed to extend the subsidy for professional payroll
intermediaries who manage an employer’s PAYE obligations, after the previous government decided to end the scheme in
early 2018.
Inland Revenue currently offers a payroll subsidy of up to $10 per pay-run to listed PAYE intermediaries who manage the
income tax obligations of eligible employers.
The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill currently before
Parliament proposed repealing the subsidy on 1 April 2018. However feedback during the Select Committee stage was
critical of the move. The announcement today reflects the Committee’s recommendations.
“The subsidy was introduced in 2006 as a way to encourage small businesses to use the services of payroll professionals
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,” says Mr Nash.
Cabinet has decided to renew the subsidy for another two years, until 1 April 2020. The eligibility threshold for
accessing the subsidy will be lowered from 1 April 2019, to businesses with less than $50,000 of income tax and
superannuation obligations (PAYE and ESCT). It’s estimated around 24,000 employers who use a payroll intermediary fall
into this category.
“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. Small businesses have the least payroll capability. The subsidy
allows them to outsource this task and offers a significant benefit.
“Small businesses are a vital part of our economy. At a time when those companies will need to get to grips with other
changes in the PAYE process, they need this support to allow them to continue to focus on their core enterprise,” Mr
Nash says.
More information about the bill can be found here: http://taxpolicy.ird.govt.nz/news/2018-02-20-employment-and-investment-income-bill-reported-back