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Small Business Sector Biggest Winners From Budget

Small Business Sector Biggest Winners From Budget

The suite of tax and other changes affecting business add up to a significant boost to the small business sector, but for the rest of business it’s “marginal”.

The gains for business include:

Introducing tax depreciation rates that reflect the real value of assets will be a significant boost to SMEs.

Raising FBT tax thresholds from $450 to $15,000 gives a small company a saving of $1800 per year.

The Kiwi Saver Scheme will provide a fund to help reinvestment back to business.

The shift in income tax thresholds benefits business by providing consumers more buying power.

The boost to industry training and apprentices is clearly a positive encouragement to small businesses to upskill as they grow.

Promoting tourism has potential to benefit many businesses in smaller centres.

“Each of these items will be of marginal benefit to a big business, but grouped together make for a significant package for SMEs”, said Michael Barnett, Chief Executive of the Auckland Chamber of Commerce.

The Kiwi Saver Scheme is an important structural change, he acknowledged.

It could provide funds to be reinvested in NZ, and create a more secure retirement income for New Zealanders as they retire, but there are some downsides. In the set up of these changes will be some compliance costs.

The Kiwi Saver Scheme will require employers to talk to employees to determine the options and it will take spending money out of the economy.

Certainly the Finance Minister has been true to his word – this is a Budget for the long term. A lot of the measures do not come in until 2007. It assumes the Government’s re-election and business as usual.

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