POORLY organised businesses may well be culled by the GST, according to Parliamentary Secretary for Employment, Workplace Relations and Small Business Mal Brough.
POORLY organised businesses may well be culled by the GST, according to Parliamentary Secretary for Employment, Workplace Relations and Small Business Mal Brough.
Mr Brough told a Business News-sponsored Small Business Develop-ment Corporation luncheon that the standard of New Zealand businesses improved with the introduction of a GST.
“Business there had to deal more professionally with their accountants and banks,” Mr Brough said.
“Those who keep records in a shoebox are in for one hell of a change.”
Jackson McDonald tax consultant Graham Harrison said the removal of the Prescribed Payments System could also pose a giant headache.
“Most contractors in that system will now have to take care of their own tax instalments,” Mr Harrison said.
“They must now make provision to meet those quarterly requirements.
“Plus there will be the problem of businesses with all these GST monies sloshing around in their pockets.
“The first Business Activities Statement is due on 21 October and they could find themselves without the cashflow for the necessary GST payments and income tax instalments unless they put the monies aside.”
Mr Harrison said the 1 July change from the current company instalment system to Pay As You Go could also create cashflow headaches.
“The PAYG instalment system is going to drag income tax installments forward – for most companies by several months,” Mr Harrison said.
“Business operators would be wise to talk to their accountants about the cashflow impacts of that.”
Mr Harrison said the changeover to the New Tax System would bring some benefits for businesses.
“I think the new regime has forced a lot of businesses to update their computers and point of sale systems. There must be some benefit from that,” he said.
“Plus, to properly administer the GST and other new tax measures, many businesses are being drawn into a quarterly accounting system rather than the traditional annual one.
“The BAS has to be lodged at least quarterly and businesses will need systems and processes to accommodate that.
“Through that process, operators will learn a lot about how their business is running.”
SBDC managing director George Etrelezis said the New Tax System forced businesses across the board to become more involved with their book-keeping.
“Plus, the BASs will force businesses to see their accountants more often – at least in the early stages of the new system.”
Mr Etrelezis believes it is important for business operators to make better use of advisors such as accountants.
Mr Brough told a Business News-sponsored Small Business Develop-ment Corporation luncheon that the standard of New Zealand businesses improved with the introduction of a GST.
“Business there had to deal more professionally with their accountants and banks,” Mr Brough said.
“Those who keep records in a shoebox are in for one hell of a change.”
Jackson McDonald tax consultant Graham Harrison said the removal of the Prescribed Payments System could also pose a giant headache.
“Most contractors in that system will now have to take care of their own tax instalments,” Mr Harrison said.
“They must now make provision to meet those quarterly requirements.
“Plus there will be the problem of businesses with all these GST monies sloshing around in their pockets.
“The first Business Activities Statement is due on 21 October and they could find themselves without the cashflow for the necessary GST payments and income tax instalments unless they put the monies aside.”
Mr Harrison said the 1 July change from the current company instalment system to Pay As You Go could also create cashflow headaches.
“The PAYG instalment system is going to drag income tax installments forward – for most companies by several months,” Mr Harrison said.
“Business operators would be wise to talk to their accountants about the cashflow impacts of that.”
Mr Harrison said the changeover to the New Tax System would bring some benefits for businesses.
“I think the new regime has forced a lot of businesses to update their computers and point of sale systems. There must be some benefit from that,” he said.
“Plus, to properly administer the GST and other new tax measures, many businesses are being drawn into a quarterly accounting system rather than the traditional annual one.
“The BAS has to be lodged at least quarterly and businesses will need systems and processes to accommodate that.
“Through that process, operators will learn a lot about how their business is running.”
SBDC managing director George Etrelezis said the New Tax System forced businesses across the board to become more involved with their book-keeping.
“Plus, the BASs will force businesses to see their accountants more often – at least in the early stages of the new system.”
Mr Etrelezis believes it is important for business operators to make better use of advisors such as accountants.
