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R&D tax credits good news in a construction economy

R&D tax credits good news in a construction economy

Accounting and business advisory firm Staples Rodway has welcomed the return of Research and Development Tax Credits.

“Research and Development is crucial to the growth of the New Zealand economy. While this is was well signalled in the election campaign, it’s great to see a billion dollars being spent, which is more than we expected,” says Mike Rudd, Staples Rodway Tax Director.

Budget 2018 takes into account $5.3 billion from a growing economy as forecast in the Pre-Election Economic and Fiscal Update.

“This figure contrasts with Staples Rodway’s inaugural Business Confidence Survey of 500 business leaders released this week which showed 55 per cent believed the economy would decline over the next year. It also contradicts Labour’s election campaign where they claimed economic growth wasn’t strong.”

“It’s interesting to see Budget 2018 announce $23.5 million over the next four years to chase unfiled corporate tax returns. The need for this is surprising given companies are already penalised through the use of money interest regime. This is a tax group which is already very visible and compliant, it’s hard to believe that $183 million would be gathered from this exercise.”

“The increase in the minimum wage to $20 by 2021 is effectively outsourcing tax cuts for low income people to the private sector. The Government has recognised the impact of inflation on its budget, but it’s not adjusting the tax bands for individuals. Bracket creep means that as incomes go up through cost of living increases the tax rate bands are stuck where they were ten years ago.”

This means Tax Freedom Day, which is calculated by Staples Rodway will likely move further out from May 7thwhere it fell this year.

“The Labour Government is so far living up to its promises of no new taxes and balancing the books. This should help with business confidence.”

“The most surprising thing in the Budget was the winebox champion bringing back a 1980s’ tax dodge with Bloodstock tax rule changes. Bloodstock was one of the classic 1980s tax dodge industries. At $4.8 million this is unlikely to be a big issue, but ironic all the same,” says Mr Rudd.

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