You read it here first: This week’s Treasury pre-election fiscal forecasts reveal a $5b hole in the tax revenues.
So why isn’t Christopher Luxon or David Seymour raising concern – have they taken the day off? No….
June 28, 2024 is the new Matariki holiday, when the Matariki constellation rises to welcome in the Māori new year. Since it’s a national public holiday, for any tax payments that would normally fall due on that day, the due date is shifted to the next working day: July 1, 2024. Not only is that in the next month, it is also in the next fiscal year.
Inland Revenue would have expected to collect $5b from GST, companies’ income tax, trusts and sole traders’ income tax on June 28, if it wasn’t a public holiday.
The bad news is the Crown accounts will lose those tax receipts from the 2023/24 fiscal year. The good news? They’ll get it back in the 2024/25 fiscal year.
“This public holiday effect is expected to affect the Crown’s tax receipts but not tax revenue, since Inland Revenue will calculate accrued tax revenue as at 30 June 2024 as it normally would at any other year end,” says Treasury spokesperson Bryan McDaniel.
“This year will be a burdensome nuisance to all with June balance dates… All in all, unfortunate timing with extra work and very likely extra cost at an already busy time.”
– Paul MacKay, BusinessNZ
Seymour is in two minds about the glitch. “Now, a day off paying taxes is something ACT could really get behind, if only it was real,” he tells Newsroom. “Unfortunately like most of Grant Robertson’s bright spots it turns out to be an accounting trick, and an extra day of borrowing to keep the lights on.”
Tax expert Terry Baucher says June 28 will coincide with a GST payment for most March 31 year-end businesses, and also for provisional tax for many farmers with a May 31 year-end. That explains why the number is so large.
“I don’t think it’s of any import – just an accounting quirk, no more,” he says.
IRD’s systems would treat the payment as being made on the due date so no interest or late payment penalties would arise.
“Of course Inland Revenue could solve this issue by going to 24/7 banking like everyone else, but to be honest it’s nice to have the extra few days grace – so to speak.”
The anomaly doesn’t affect PAYE income tax on wages and salaries. These are normally due on the 5th and 20th of each month, so not affected by Matariki in 2024.
BusinessNZ payroll guru Paul MacKay says this year will be “a burdensome nuisance to all” with June balance dates – especially the Government.
“The issue is holiday pay for those who take the day off and the requirement to pay time-and-a-half and an alternative holiday to those who work that day. Both will have to be worked out at a time when payrolls are busy with year end accounting.
“Also many businesses pay bonuses around this time. These can bump up holiday pay if they are paid in close proximity to the holiday. All in all, unfortunate timing with extra work and very likely extra cost at an already busy time.”