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National policy for stable taxation accrues economic benefits
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The National Party planned to introduce a stable tax system, without making drastic changes to the minimum wage. The level of minimum wage impacts the level of unemploymen in the economy. National considers a number of issues non-negotiable. Among them are (a) No Capital Gain Tax (b) No change in GST (c) Reduction in Company Tax Rate in the long run.Loss-making start-up companies are supported by new tax rules that help them to cash out all or part of their tax losses from R&D expenditure. Inland Revenue Department (IRD) has larger outlay to target property speculators and others avoiding tax, making the system become fairer for everyone.
Minimum wage
While many political parties campaigned on drastic increase in minimum wage, National refrained from making any promises. Although there is no proven relation between higher minimum wage and unemployment, but employment of new entrants into the job market is directly related to the level of minimum wage. A low pay rate inspires confidence among businesses to hire new employees, especially young graduates. It is generally believed that companies would shy away from fresh young graduates if there is a rise in minimum wage. Employers would be attracted to shift New Zealand jobs to overseas where pay rate is substantially lower.
Ideally, minimum wage should be used for new employees who are being trained, and have no experience. It would then become the moral responsibility of employers to lift their pay scale in due course. Mainly large New Zealand employers have already lifted thier minumin wage to be $18 an hour.
Altering GST
The National Government lifted the rate of Goods and Services Tax (GST) from 12.5% to 15% from 01-10-2010. It refrained from commenting on any possible change in the structure during its election campaign, again contrary to some of its political rivals who pledged to lower the GST rate or at least exclusive essential items such as fruits and vegetables. GST is widely detested as unnecessary and inescapable but successive governments have tried to tweak, causing more damage to the existing tax structure.
Always inversely proportional, higher GST would mean lower company and other taxes and vice-versa.
Capital Gains Tax
National Party has not made any announcement that it would introduce Capital Gains Tax but intends to extend the IRD range to find the property speculators and tax them. Exemption of the family home will make Capital Gains Tax very complex. Imagine the property was on rent for few years, and currently you are living in the property so effectively it is your family home and upon sale this should not be taxed. It will be hard to find at what point of time transactions will be taxed. People may try to manipulate the tax, and this may make it harder to administer for the IRD. If the capital gains tax was to be introduced, for it to have its intended effect, it should have very little exemptions like GST.
Overall National Party advocates a stable tax policy that would encourage people to work hard to earn big.
Saurav Wadhwa is a Principal Accountant at IBBZ Accounting Limited
M Bus (TAX) PG Cert (LAW) CA CPA
Membership and Qualification:
- Masters in Professional Business Studies (Taxation) with Distinction from Auckland University of Technology
- Post Graduate Certificate in LAW, Law School at Auckland University of Technology
- Chartered Accountant(CA), New Zealand Institute of Chartered Accountants (NZICA)
- Certified Practicing Accountant(CPA), CPA Australia
- Bachelor of Commerce, Grad. Cert. in Business from Auckland University of Technology
Saurav has many years of practical experience in tax & accounting services and is the co-founder of IBBZ Accounting Limited. He is qualified both in law and accounting. Saurav has worked in various tax & accounting specialist roles for large corporates in New Zealand. He loves to work with Small Businesses.
His key focus is on:
- Tax advisory for small and family operated businesses on a wide range of taxation issues.
- Legitimate tax saving structures.
- Advising on range of new business issues.
- Ensuring business growth is attained.
- Effective cash flow planning.
Saurav specialises in Tax Disputes resolution, Tax Relief applications, Tax Debt resolution/management, and representation in Tax Audit. Saurav can represent you in Taxation Review Authority, in Tax Dispute Court Cases or he can represent you during Tax Audit Investigations.
Blend of skills in Tax laws and accounting, makes him perfect advisor for small businesses and individuals like you. Saurav understands how to safeguard your business from creditors risk, maximise the business growth and pay low taxes. He can be your good strategic and business partner. He is of a friendly nature and easily approachable.
Saurav understands the numbers very well. He is a qualified Chartered Accountant and registered with highest professional accounting bodies of Australia and New Zealand. He can help you to plan for the future to satisfy all your financial needs.
Consumed by a hunger for knowledge, Saurav has never stopped furthering his education or expanding his pool of knowledge. Nothing gives Saurav more satisfaction than assisting his clients to achieve their financial goals. His diligence, passion and accuracy has earned him a reputation as a reliable professional who strives to serve his clients above and beyond the call of his duties.
Saurav was nominated for the Best Accountant of the year and the Young Entrepreneur of the year, and his company IBBZ Accounting won the award of Best Small Business 2014. In 2015 Saurav won the award of Best Accountant of the Year.
In 2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia.
Saurav is a dedicated family man. Saurav is very fond of outdoor activities and enjoys pretty much all outdoor activities: running, bike, motorbike, snorkel, fishing, skiing etc. Saurav, is also a self-confessed workaholic, spends some of his free time thinking about his client’s affairs and forecasting their financial future.
He can be contacted on saurav@ibbz.co.nz or 09 272 8050
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