A number of initiatives were introduced in yesterday’s budget that will have a direct benefit for businesses. Geordie Hooft, tax partner, Grant Thornton New Zealand said the most noteworthy change is the reduction in ACC costs for businesses, which are forecast to fall by $300 million in the 2014/15 year and a further $1 billion in the following year.
There is a focus on research and development. “While there is no return to the R&D tax credit that was abolished by the government after 2010, the proposal is to allow a tax refund where losses arise from eligible R&D expenditure,” said Mr Hooft. “In addition, there will be increased investment in research and development grants.”
Also of benefit is the allowance of a deduction for certain “black hole” expenses. “These are business costs that are neither deductible nor available for a future depreciation deduction,” said Mr Hooft. “Examples such as certain capitalised legal and resource consent costs and certain company administration costs will become immediately deductible.”
Property investors will need to ensure that they comply with their obligations. “The government is committing a further $6.65 million for investigating this area,” said Mr Hooft. “Inland Revenue gets a return of around $6.60 for every dollar they spend auditing the property sector.”
The government’s commitment to post-earthquake recovery will have particular benefits for the Canterbury economy. “The commitment of a further $2.1 billion to projects such as the redevelopment of Christchurch and Burwood Hospitals, the justice and emergency services precinct, schools and the tertiary sector will stimulate the economy, creating new employment and providing opportunities for businesses to develop and grow.”
Geordie Hooft
Partner, Tax
Grant Thornton New Zealand Ltd
T +64 (0)3 379 9580
E geordie.hooft@nz.gt.com