Key's SME incentives fall short, says franchisor
last updated 29/07/2009
For a franchise business operating on both sides of the Tasman, the recent package of SME "incentives" announced by both Kevin Rudd and John Key make an interesting comparison, says Philip Horrocks, director of the New Zealand-based Provender vending franchise which operates in both countries.
'In NZ, the reduction in the threshold increase for provisional tax makes no material difference as you can re-estimate during the year anyway,' he points out. 'Expensing of legal fees up to $10,000 is hard to understand as most legal fees are expensed, not capitalised. Perhaps this is a sop to the lawyers! Changes to GST registration thresholds again do not appear to offer any material benefit. Changing the amounts that the Disputes Tribunal can hear is positive and will simplify debt collection - however that is not great if debt collection is an issue'
Philip feels that what is missing from New Zealand's SME offer are any incentives for immigration, increased capital spending or investment, accelerated depreciation allowances, removal of FBT for businesses under a threshold of revenue and a reduction in the company tax rate.
By contrast,he says, Australia has a major incentive for SME's with additional depreciation or investment allowances of an extra 30% on capital expenditure for depreciable tangible items (for example, fit-outs, capital equipment, computers, vehicles) in the 1 July - 31 December 2009 year. This is a significant tax break for SME's with sales under $2m and applies to items costing from $1000. For businesses with sales over $2m items it applies to items costing over $10,000.
'From a business case scenario, and definitely in our franchise, the incentive is to invest capital in Australia, not NZ! There are various other tax regulatory amendments (as there are in NZ) but this is the one that encourages investment.'
Are the incentives any use to franchisees and franchisors? Send us your opinions.
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