Although the budget didn't cater directly to small businesses, it could hold significant indirect implications for you.
Economic Outlook: We are avoiding recession
One of the foremost takeaways from the budget is New Zealand's concerted effort to steer clear of recession.
Despite global economic uncertainties, the government has pledged to reduce spending by 5%, allowing net debt to climb to 22% of GDP.
Coupled with optimistic Treasury forecasts, including the regrowth of tourism and unexpected migration booms, these measures are anticipated to shield the nation from the downturn.
Employment Landscape: potential challenges ahead
While the avoidance of recession is promising, the budget paints a nuanced picture of the employment landscape.
With the Budget surplus likely deferred to 2025/26, businesses grappling with labor shortages may face further hurdles. Treasury projections suggest that unemployment could rise to 5.3% next year, up from the current 3.4%.
This forecast underscores the need for strategic workforce planning among small businesses.
Trustee Tax Rate
While this happened earlier in the year the increase in the trustee tax rate poses additional considerations for small businesses with trust structures.
Under the new measure, the tax rate on trusts will increase to 39%, aligning it with the top income tax rate. This change underscores the importance of reviewing financial structures and seeking professional advice to navigate the evolving tax landscape effectively.
Key Infrastructure and Social Support Initiatives
While direct provisions for small businesses may be limited, several key announcements within the budget could indirectly benefit you:
The $6 billion National Resilience Plan aimed at future-proofing New Zealand's critical infrastructures, including road and rail, telecommunications, and electricity, could provide enhanced protection for businesses reliant on these networks.
The reinstatement of the Training Incentive Allowance to incentivise education among sole parents, disabled individuals, and their caregivers could potentially expand the pool of skilled workers available to small businesses.
The commitment to constructing 3,000 new state homes by June 2025 may alleviate housing challenges in certain regions, potentially benefiting small businesses in the building and trades industries.
The allocation of $75 million for Industry Transformation Plans in horticulture, digital, and tourism, could pave the way for innovation and growth within these industries, creating opportunities for small businesses to thrive.
The bottom line is, that while the New Zealand budget may not have unveiled a slew of targeted measures for small businesses, its broader economic and social initiatives hold promise for business success.
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