Provisional tax changes small but welcome difference

February 4, 2009

Provisional tax is the business equivalent of PAYE on wages and salaries with one significant difference.

PAYE is levied on money actually earned, provisional tax is paid on a best guess of what will be earned and there are financial penalties if  your income is higher than expected.

That means businesses are caught between the rock of paying more in advance than they need to by overestimating their projected earnings, and the hard place of paying the penalties if they underestimate their end of year’s financial situation.

It’s not easy for any business to accurately predict its income and it’s particularly difficult for primary industry where the weather and markets can vary so much but the government has announced two changes to provisional tax today which will reduce the costs:

* Removing the 5% “uplift” rate that businesses pay in advance on provisional tax instalments throughout the year. To calculate the provisional tax they must pay in any given year, most businesses use the previous year’s income and add 5% to cover likely growth in the new income year – this 5% uplift will be removed for the rest of this year and next year.

*Reducing the “use of money” interest rates on underpaid and overpaid tax. The rate for underpayments will reduce from 14.24% to 9.73% and the rate for overpayments will fall from 6.66% to 4.23%. These changes will apply from March 1 2009.

These and other measures announced in the small business relief package are, as the NBR says more evolution than revolution but what else can they do?

The domestic constraints on business have been evolutionary too and there is no fast or simple remedy for them. Added to that is the global financial situation which will impact on us but is beyond any government’s control.

However, while the measures announced today may be relatively small they are significant in that they show we at last have a government that understands the importance of businesses and is prepared to cut some of the ties which have been holding them back.

There’s a story about a man wandering along a beach littered with starfish stranded when the tide went out.

He comes across a boy throwing them into the sea and says,  “There’s so many nothing you do will make a difference.”

The boy bends down, picks up a starfish, throws it back and says, “I made a difference to that one.”

The government must feel it’s facing a similarly impossible task, but Keeping Stock says today’s measures have made a difference to him.


ERO to focus where needed most

February 4, 2009

A press release from Education Minister Anne Tolley announces that the Education Review Office will review schools with good records less often and schools which aren’t performing well will be reviewed more often.

That leaves schools which are performing well to get on with teaching and provides closer monitoring and more help to those schools which have problems.

That sounds like a very sensible move to me.

I used to do evaluations of residential services for intellectually disabled people for the Ministry of Health and that’s how we worked, visiting service providers with consistent records of high standards less often and keeping a closer check and offering more help to those which had problems.


Too much too soon

February 4, 2009

If there’s one thing more likely to stop me buying than the appearance of Christmas decorations before December  -first tinsel spotted in September last year 😦 – it’s the early appearance of Easter eggs and hot cross buns.

Easter Sunday isn’t until April 12th this year but I noticed Easter eggs in the supermarket in the middle of January and saw the first hot cross buns last week.

Once upon a time hot cross buns were a once a year treat which appeared just in time to be toasted on Good Friday and Easter eggs were similarly special to be eaten in moderation (one or maybe if we were very lucky, two) on Ester Sunday.

Those were the days when treats were restricted to Chirstmas, Easter and birthdays.  Now all there’s a whole lot of manufactured celebrations which merge into one big commercial mess from one excuse to buy, eat and drink to another, origins forgotten and devoid of meaning.

Last year I launched a one-woman protest when I saw the first foil covered eggs in the supermarket in January and the buns a few weeks later, with a pledge to neither eat nor buy any until Easter.

I’ve made the same vow this year: no spicey buns and chocolate and marshmallow confections will pass my lips until the appropriate time.


Building regs go too far

February 4, 2009

A builder told me that recent increases in building regulations had added about $10,000 to the cost of a new house.

We ran into a relatively minor bit of extra red tape when we put a new house on the dairy farm.

It’s got a French door from the living room and the distance from the house to the path was a little higher than comfortable. I suggested raising the path but the builder said he couldn’t because regulations in the wake of the leaky homes saga required a minimum height.

He had to add a step which gets in the way of children wanting to ride bikes on the path – and this is on the side of a hill in North Otago where, with an annual rainfall of just 20 inches, leaky homes have never been a problem.

Even relatively minor alterations can turn into major ones because of over-strict regulations. Close-Up  last night told the story of a locksmith who wanted to put a shower in for employees and found the $2,000 budget would blow out by another $8,000 because the building code requires wheelchair accessibility.

The requirement for disabled access and loos in public buildings is understandable but the need for a wheel-chair friendly shower in every little business is going too far.

However, New Zealand isn’t the only place this happens. We visited a sheep feedlot in northern New South Wales which was built on stilts to keep it cool and make cleaning up the droppings easier. During the plannning the building inspector told the owner it would have to have a ramp so the loo could be accessed by workers in wheelchairs.

She pointed out that the nature of the work, which included shearing, meant it couldn’t be done by people with that sort of disability but the council wouldn’t budge because every workplace had to have wheel chair accessible loos. She finally got around the code by putting the loo under the shed at ground level.


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