Post election: what’s in store for your business?
Labour has just had the biggest win in over 50 years and with 64 seats it will be relatively easy for them to make the changes they proposed in their pre-election campaigns. The expectation is that they will go further and faster this term. Whether or not you agree, it’s time to prepare. So, what does a Labour government mean for your business?
Personal income tax
Labour has announced plans to increase income tax for the top 2% of earners, with a new tax rate of 39% if your personal income is over $180,000. While this is a personal income tax increase, if you earn that income through a business, there may be some ways to reduce the impact.
The good news on tax is that there will be no fuel tax increases and there will be no new income taxes next term if Labour were to win again.
If you earn more than $180,000 through your business, book in for a tax planning meeting now.
Multinational tax loopholes
Labour is planning to continue working with the OECD to ensure that large multinational entities such as Google and Facebook pay their fair share of tax. The OECD project has been ongoing for a couple of years now and is currently being held up by a lack of agreement from the USA.
Labour is proposing that if an international consensus based approach does not work then the government will introduce its own digital services tax (DST), as has been done by several other countries already including France, India and Italy, and as has been proposed in Canada and Spain among others. Over time this is an issue that we believe needs to be dealt with to stop the burden of tax on kiwi businesses and individuals rising.
There is hope though that with a new administration coming on board in the US that has already indicated they will rejoin other international initiatives (such as the World Health Organization) that a multilateral approach will get over the line.
The focus of Labour’s policies around the economy is job losses as a result of Covid-19. There are support packages for businesses to employ staff whose jobs were affected by Covid-19 and packages to support apprenticeships.
If you are looking to hire it is worth investigating how these packages could support your business.
Small business support
Again, as a result of Covid-19 many small and medium enterprises in New Zealand have suffered. Continuing on from their Covid-19 support, the government will provide support packages for small and medium enterprises to grow and export with tax refunds, interest free loans and more. Keep an eye on how this develops over the coming months.
Minimum wage and sick leave benefits
Labour are keen to create a better working environment and are starting with an increase in the minimum wage to $20/hr and an increase in the minimum sick leave entitlements from five days to ten days. Having a team that feels more secure in their jobs can be great for a business, but you will need to rejig some budgets to incorporate these changes.
Call us now if you would like some assistance to make or update your budget.
Labour’s policies aim to provide every child with the same opportunities, no matter where they have come from. As part of this commitment they are investing in closing the pay gap for teachers in early childhood education and care centres and kindergartens. If you run a childcare business learn how these changes could impact you by giving us a call.
If you think you will be affected by any of these changes and would like to discuss the impacts on your business further, get in touch.