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Speaker 1: To the budget yesterday. It turns out there is no

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Speaker 1: cap on how much the government could end up spending

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Speaker 1: on that business tax incentive, which was unveiled in that budget.

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Speaker 1: It seems to have, according to at least one report,

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Speaker 1: called even Cabinet Minister Shane Jones by surprise that businesses

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Speaker 1: can spend as much as they like and still claim

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Speaker 1: the twenty percent tax incentive. Now, Robin Walker is a

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Speaker 1: tax partner with Deloitte and it's with us. Now, hey, Robin, Hi,

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Speaker 1: were you surprised?

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Speaker 2: I was surprised. I was absolutely gobsmacked.

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Speaker 1: Why.

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Speaker 2: I just wasn't expecting it. I thought when they took

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Speaker 2: you know, appreciation of buildings, which cost half a billion

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Speaker 2: dollars to take money to save some money, that you know,

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Speaker 2: that was a huge number. But this is three times

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Speaker 2: that I would never have envisioned them spending us. But

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Speaker 2: I think it's really positive.

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Speaker 1: Oh, hold on, I think we're talking about different things.

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Speaker 1: You are surprised that it's in the budget at all.

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Speaker 2: Yes, I was surprised it was in the budget at all.

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Speaker 2: I thought I'd do some tinkering.

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Speaker 1: That is, this is matters And are you surprised that

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Speaker 1: there is no cap.

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Speaker 2: I think having no cap puts the right incentivece but

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Speaker 2: I mean, obviously it makes it easy for people. So

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Speaker 2: it is important though that people think about how it

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Speaker 2: actually works through. So it's not like if you spend

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Speaker 2: one hundred dollars you get twenty dollars cash back. The

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Speaker 2: actual cost of it is you get twenty percent is

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Speaker 2: a depreciation deduction. So if you're a company, you then

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Speaker 2: get your deduction is twenty eight percent of that. So

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Speaker 2: if you're spending ten thousand dollars, for example, that equates

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Speaker 2: to a cash tax saving of five hundred and sixty dollars.

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Speaker 1: Yeah, I worked it out. It's basically about five point

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Speaker 1: six percent of whatever is spending, right, So if you're

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Speaker 1: spending a billion, it's five point six percent of that

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Speaker 1: that you get back. Yep, we'll get off rather whatever's right.

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Speaker 1: Are you surprised that buildings are in there? Shit, buildings

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Speaker 1: been there, because it's somehow I had just imagined that

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Speaker 1: this would be for productive assets, assets that are going

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Speaker 1: to actually increase our productivity, not things like buildings.

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Speaker 2: Well, commercial buildings do have productive uses. I mean, it's

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Speaker 2: definitely good for our building stock to be modern as well,

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Speaker 2: and One of the positive things is that improvements to

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Speaker 2: existing buildings, and we've got a lot of existing buildings

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Speaker 2: that need earthquake strengthening that will also qualify those expenses

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Speaker 2: have largely been what we call black hole. There's been

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Speaker 2: no deductions allowable for business owners for those and so

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Speaker 2: that was really creating a drag on people getting a

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Speaker 2: move on incurring that type of expenditure, whereas this will

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Speaker 2: put a real incentive on people to get started.

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Speaker 1: Would you have left it at twenty percent or would

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Speaker 1: you have gone higher?

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Speaker 2: When you look at the regulatory impact statement, and it's

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Speaker 2: a really good read for the Bostins out there who

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Speaker 2: need some weekend reading, they say that twenty percent is

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Speaker 2: the sweet spot. So it's you know, it's obviously costing

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Speaker 2: a lot, but it's not costing as much. So officials

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Speaker 2: also looked at whether or not they could reduce the

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Speaker 2: company tax rate by five percent instead of this, and

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Speaker 2: this was a lot cheaper than that.

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Speaker 1: The reason I ask is because as I as I

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Speaker 1: discussed on the show yesterday, both Donald Trump and Rishi

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Speaker 1: Sunac I've been told actually ran it out at about

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Speaker 1: one hundred percent. And I was having a chat to

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Speaker 1: former Revenue Minister stun Asho was in the budget yesterday

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Speaker 1: along with your good self, and he was saying to

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Speaker 1: me that businesses had asked for fifty percent. Twenty percent

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Speaker 1: seems on the low end.

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Speaker 2: Well it's still more than nothing.

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Speaker 1: You're you're, you're so easily pleased.

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Speaker 2: I am easily please.

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Speaker 1: Okay, well we'll just take it's more than nothing. And

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Speaker 1: there there it is, Robin, I really appreciate it. Thank you,

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Speaker 1: look after yourself. It's Robin Walker, Deloitte Tax Partner. For

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Speaker 1: more from Hither Duplessy Allen Drive, listen live to news talks.

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