"Good on Inland Revenue" for forcing SMBs to adopt tech
Many SMBs are suffering from ‘technology phobia’ so it’s a good thing Inland Revenue is forcing businesses to adopt the new payday filing requirements that come into effect in April.
At least that’s what NexGen Group’s director Vinay Iswar says – and the new requirements may encourage SMBs to lift their game.
Iswar believes that local reactions to the payday filing requirements prove that New Zealand still has a long way to go before it catches up to the OECD.
"We heard nonsense about it being a stealth tax, a waste of time and a way for the IRD to spy on what goes on within the business. One of the reasons New Zealand’s productivity is so low is because we’re not adopting technology fast enough, and the new payroll reporting regime tells us why,” Iswar says.
“There’s a resistance to change. Many people don't want to have to learn something new. Unfortunately, fear and suspicion are very much alive in 2019, not to mention potentially an unreasonable obsessiveness with privacy.”
Instead, payday filing may actually provide a benefit to SMB owners because it will teach people that technology isn’t scary. It can, Iswar says, create tangible cost and time-saving differences.
“If SME owners won’t adopt technology change voluntarily, they’re never going to discover the benefits for themselves. I say good on Inland Revenue for helping some business owners into the light.”
Currently payroll and PAYE filing can take hours to complete, and some businesses leave it until the last minute so they end up facing cashflow problems.
“The reality is that many payroll providers have been doing this for years. The reports are compiled automatically and the PAYE collected on behalf of the business. They just didn’t file until it was required,” says Iswar.
“The only real change is that Inland Revenue wants it filed automatically, online and weekly instead of monthly. This means that instead of having to come up with a big sum of money to pay PAYE all at once, businesses can spread out the payments over a month – it’s a good thing for cashflow.”
Inland Revenue now has real time information on your business, such as your required PAYE payment on a weekly basis, it isn’t good business to conceal information from Government; it’s information that should be declared anyway.
“The new payroll reporting regime is a nice, systematic way to pay your people and it’s one less IRD payment. Your employees can file their income tax return a lot sooner, which means swifter access to things like child support and working for families,” says Iswar.
While some SMBs might be tempted to save money and go through the process themselves, it will be a heavy burden.
“I’d encourage SME owners to take this as an opportunity to also explore other technology solutions like Xero and various timesheet software solutions,” says Iswar. “Keep up with change and add value to your business because you will find that automation actually leads to less scrutiny, less invasion of privacy and less audit pain.”