08 Nov A New Government
A new government
And so, the election is over for another 3 years. As with any election, opinion is divided over the outcome. But the fact remains, New Zealand has a new government, who have promised to make a few changes.
When all the campaigning, press conferences and coalition deals are done and dusted, the thing that really matters is; what gets done. So, what will a Labour led government now do? Whilst on the campaign trail, one of the areas that Jacinda Ardern was criticised for was a lack of detail in Labours policy. Tax – an ever-contentious issue at election time – was one of the areas with the least detail available. So, what do we know?
There won’t be a decrease in individual or corporate tax rates. The previous National government had promised a reduction in individual tax, but this has been reversed by the incoming Labour government. However, they say that their Families Package will see more families with children better off, with boosts to Working for Families and extending paid parental leave to 26 weeks.
If you are invested in residential rental property, two policy indications might be of interest to you. First off, the ‘bright line test’ (the test that roughly says the sale of any residential house within 2 years of purchase is subject to income tax, except that which is used as a main family home) is going to be extended from the present 2 years to 5 years.
Secondly, negative gearing may no longer be so attractive, as Labour say they will no longer allow losses from rental properties to be offset against the income earned on other sources of income, hereby reducing the amount of tax to pay. While it doesn’t appear in the policy section of their website, it has been mentioned that rental ‘losses’ could be ‘ringfenced’ and used against future rental profits. The devil is in the detail, at this stage, it remains to be seen exactly how this will work.
Multinationals will be targeted, and while the particulars are yet to be released, Labour say they will collect an additional $200 million from multinationals. Presuming they follow through with it, this will be a good start. But, by Labour’s own admissions, the Tax Justice Network suggests that NZ is missing out on $500 million, so there will still be a wee way to go.
(Almost) the festive season
The days are getting longer, the temperature is getting warmer and barbecues across the nation are being dusted off. It’s less than 2 months to Christmas. How does it come around so quick!
Here are 5 quick things to think about in the run up to the festive season:
- November is the last full month of trading for the year, what can you do right now to make it a good one?
- A lot of businesses have the post-Christmas hangover of tight cashflow in January/February. If this affects your business, what can you do now to mitigate this risk? Banks are more receptive to lending when you have cash in the bank and are forecasting a shortfall rather than when you are in the middle of a cashflow crisis.
- Is the staff roster all sorted for the holiday period? Who is taking holidays when? What are your shut down days? Who is on call?
- Holiday pay. If you don’t know your obligations, check out Employment New Zealand (part of MBIE) here.
One more thing to think about. Not to be a buzz kill, but if you are an employer, you have a responsibility for your staff at any business function. This includes Christmas parties. Whenever booze is involved, health and safety becomes a little more challenging! Make sure that you’ve got a way to get the team home safely in one piece.
