The harsh results of the extended bright-line rule, the plethora of regulations being piled onto small businesses and the financial sector, and an example of innovation in construction – welcome to my monthly roundup of news for small business owners across the country.
The extension of the bright-line test to 10 years by the Government has hit many Kiwis who have been affected by life events outside of their control.
Ten years is a long time in someone’s life. Partnerships break down and couples split up. Older people move into retirement villages. Police members and teachers have to relocate for work. Military personnel are posted overseas (as highlighted in this article by Brent Melville for BusinessDesk https://businessdesk.co.nz/article/property/thank-you-for-your-service-now-heres-your-tax-bill) and people suffer health crises and are forced to sell land or property to support themselves.
The important point is the unfairness of these capital gains tax rules and how they have essentially been imposed without any thought about the concessions you might expect with a properly designed capital gains tax. The approach of the bright-line rules is harsh and uncaring.
National will wind back the bright-line test to two years when re-elected.
The Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill had its second reading in Parliament. It comes at a time when New Zealanders are facing a cost of living crisis. Food prices are up more than 13 per cent, average rent is up $150 a week, and it costs $45 more at the pump to fill a standard tank of petrol.
Yet the Government is intent on piling on the taxes. There is the Auckland regional fuel tax, the proposed light rail tax, the extension of the bright-line rule, the removal of interest deductibility on rentals, the new 39 per cent income tax rate and, perhaps worst of all, the latest jobs tax proposal. The latter will impose a huge cost, not only on employers, but on every New Zealander who works.
National, when re-elected, will repeal these new taxes and reinstate interest deductibility.
Leader Christopher Luxon also announced recently that we will amend income tax thresholds: the 10.5 per cent tax rate would apply to the first $15,600 of income, not $14,000 as it is currently; the 17.5 per cent rate would extend to $53,500 rather than $48,000; and rather than the 33 per cent tax rate kicking in at $70,000 – less than the average wage – it would increase to $78,100.
This will make life a little easier for Kiwis who are struggling to get ahead.
Commerce & Consumer Affairs
Commerce Minister David Clark has recently issued a proliferation of new regulations that will significantly impact small businesses and financial institutions.
In December last year, he issued new regulations regarding the Credit Contracts and Consumer Finance Act (CCCFA) which has led to banks unnecessarily reviewing personal banking transactions as living expenses. This has led to a decline in lending to ordinary New Zealanders.
Secondly, National has concerns with the Financial Markets (Conduct of Financial Institutions) Amendment Bill. It creates yet another set of obligations for financial institutions and insurers, and unnecessarily interferes with the way third parties sell their products.
Thirdly, the Government proposes to introduce a new law that will require greater disclosure of ownership by directors of a company, with directors and shareholders required to make their information available to the public through the Companies Office. National will closely monitor this bill as it raises issues regarding higher compliance costs and the possibility that it may make it more difficult to find talented directors to serve on company boards.
Not all people are equipped to deal with this avalanche of regulatory reform. Moreover, in many cases, a multitude of Government agencies are involved in these institutions, leading to different legislative interpretations, increasing the cost of intermediaries, and unnecessarily complicating commerce.
Building & Construction
Builders are being greatly impacted by supply chain issues, an acute shortage of labour and uncertainty around Omicron. This is affecting their ability to meet project deadlines and also squeezing their margins; for some, it is having a detrimental effect on their mental health.
The Commerce Commission is currently undertaking a market study into residential building supplies. The study is limited to the building envelope – the foundation, floor, roof, walls, and insulation – but this is unlikely to have any meaningful impact on improving the supply of the major components of residential buildings.
In the meantime, builders and quantity surveyors will have to continue to factor in further rises to building material costs for the next six months, with prices predicted to increase a further 11 per cent according to the EBOSS Construction Supply Chain Update for Q1 2022.
All of these issues simply exacerbate the pressure on our building sector, which is why initiatives like the Master Electricians’ Wellbeing Scheme, launched in February this year, and the well-established Mates in Construction suicide prevention programme are so important.
Reducing the carbon footprint of our buildings is one of our biggest issues which is why innovation is so important. QOROX in Hamilton is the first company in Australasia to create structures out of concrete using additive manufacturing, or 3D printing.
Director Wafaey Swelim says the benefits are numerous: it’s 75 per cent faster than traditional methods of construction, it generates 70 per cent less waste with 40 per cent less emissions, and of course being concrete, it’s durable and low maintenance.
QOROX designs are computer generated and the concrete is a special mix that sets in just three minutes. Structures can be created in their workshop, or the machine can be transported to a site. The system has been tested by BRANZ and is compliant with New Zealand’s building standards.
QOROX structures can currently be found in landscaping and civil construction projects, like the new seats along the banks of the Waikato River in Hamilton, but the QOROX team are about to embark on building an entire house for a client in Auckland, which will likely feature on a future edition of Grand Designs.
Andrew Bayly is the MP for Port Waikato and the National Party’s Spokesperson for Small Business, Revenue, Commerce, Consumer Affairs, Manufacturing, Building & Construction; he can be contacted at [email protected]
Do you like this page?