Martin Veitch
Head of Advisory, Advisory Partner, Managing Partner BDO Christchurch
Not enough for small and medium sized business
The development of Industry Transformation Plans across Advanced Manufacturing, Agritech, Food & Beverage, Digital, Construction, Tourism, Forestry and Wood Processing is showing a clear focus on where the Government believes we can get a global competitive advantage. But right here right now, a focus on Infrastructure and the Regions is where the most immediate benefit is likely to come.
SMEs, long considered the backbone of our economy, have a been given a specific focus on digital tech to help boost the economy. The aim being to grow the digital skills and capabilities to improve productivity. Budget announcement include:
- $44m over 5 years on Digital Boost
- Training (delivered via the private sector)
- Digital Business Advisory
- $74m merchant service fee savings (announced last week)
So, a forward focused move, after the past year’s COVID subsidies, is the right way to go. A move from life support to better business fitness for the future. What the past year has shown is that we are well ready willing and able to adopt a full digital shift.
BDO Consultant Adam Davy says: “We like the simplicity of thinking, but businesses still suffer from the continuing compliance costs and the issues around labour shortages. So sadly, it falls short."
More importantly, Business has real issues in attracting and retaining staff, both skilled and skilled. It’s a continual pressure battle as employees need to be paid more to live, and employers are struggling to afford higher wages. So while the opportunities are there, the practicalities are a lot more difficult, and inflationary pressures can only mount. COVID has meant worldwide supply chain issues from computer chips to building materials. Rest assured, many businesses and their people will still be doing things tough.
Research & Development – The pain of transition eased
The recent announcement of a one-off top up to a company’s Research & Development Tax Incentive (RDTI) entitlement to assist the transition from the Callaghan Growth Grants to the RDTI was welcome news particularly in the Tech Space.
In a letter from the Hon Dr Megan Woods last month, the Minister outlined that those companies whose claims for a RDTI in the 2021/22 was below the amount of support provided by past Callaghan Growth Grants, would receive a top up to their RDTI entitlement to restore the support to a similar level of funding they had received in the past.
The top up will be available to former Growth Grant recipients for R&D expenditure in the 2021/22 income year or those who have made RDTI claims in the past two years.
It is to be administered through the RDTI application process and the top up is expected to equate to the average of the past three years Growth Grants less an eligible RDTI credit in the 2021/22 income year.
Growth Grant recipients should contact their BDO adviser to discuss the eligibility to claim a RDTI credit in 2021/22 and obtain this RDTI transitional measure.