Robyn Walker: Deloitte Tax Partner on the investment boost without a cap

Finance Minister Nicola Willis has hit go on commercial building developments, oil and gas exploration, dam builders and more.

In a new investment boost programme, businesses can now deduct twenty percent off the cost of a new asset.

There’s no cap on how much the asset can cost.

Deloitte Tax Partner Robyn Walker talks to Heather du Plessis-Allan about the new scheme.

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Episode Transcript

Speaker 1 (00:00):
To the budget yesterday. It turns out there is no
cap on how much the government could end up spending
on that business tax incentive, which was unveiled in that budget.
It seems to have, according to at least one report,
called even Cabinet Minister Shane Jones by surprise that businesses
can spend as much as they like and still claim
the twenty percent tax incentive. Now, Robin Walker is a
tax partner with Deloitte and it's with us. Now, hey, Robin, Hi,

(00:22):
were you surprised?

Speaker 2 (00:24):
I was surprised. I was absolutely gobsmacked.

Speaker 1 (00:27):
Why.

Speaker 2 (00:28):
I just wasn't expecting it. I thought when they took
you know, appreciation of buildings, which cost half a billion
dollars to take money to save some money, that you know,
that was a huge number. But this is three times
that I would never have envisioned them spending us. But
I think it's really positive.

Speaker 1 (00:46):
Oh, hold on, I think we're talking about different things.
You are surprised that it's in the budget at all.

Speaker 2 (00:50):
Yes, I was surprised it was in the budget at all.
I thought I'd do some tinkering.

Speaker 1 (00:55):
That is, this is matters And are you surprised that
there is no cap.

Speaker 2 (01:01):
I think having no cap puts the right incentivece but
I mean, obviously it makes it easy for people. So
it is important though that people think about how it
actually works through. So it's not like if you spend
one hundred dollars you get twenty dollars cash back. The
actual cost of it is you get twenty percent is
a depreciation deduction. So if you're a company, you then

(01:23):
get your deduction is twenty eight percent of that. So
if you're spending ten thousand dollars, for example, that equates
to a cash tax saving of five hundred and sixty dollars.

Speaker 1 (01:34):
Yeah, I worked it out. It's basically about five point
six percent of whatever is spending, right, So if you're
spending a billion, it's five point six percent of that
that you get back. Yep, we'll get off rather whatever's right.
Are you surprised that buildings are in there? Shit, buildings
been there, because it's somehow I had just imagined that
this would be for productive assets, assets that are going
to actually increase our productivity, not things like buildings.

Speaker 2 (01:55):
Well, commercial buildings do have productive uses. I mean, it's
definitely good for our building stock to be modern as well,
and One of the positive things is that improvements to
existing buildings, and we've got a lot of existing buildings
that need earthquake strengthening that will also qualify those expenses
have largely been what we call black hole. There's been

(02:17):
no deductions allowable for business owners for those and so
that was really creating a drag on people getting a
move on incurring that type of expenditure, whereas this will
put a real incentive on people to get started.

Speaker 1 (02:31):
Would you have left it at twenty percent or would
you have gone higher?

Speaker 2 (02:36):
When you look at the regulatory impact statement, and it's
a really good read for the Bostins out there who
need some weekend reading, they say that twenty percent is
the sweet spot. So it's you know, it's obviously costing
a lot, but it's not costing as much. So officials
also looked at whether or not they could reduce the
company tax rate by five percent instead of this, and

(02:57):
this was a lot cheaper than that.

Speaker 1 (02:58):
The reason I ask is because as I as I
discussed on the show yesterday, both Donald Trump and Rishi
Sunac I've been told actually ran it out at about
one hundred percent. And I was having a chat to
former Revenue Minister stun Asho was in the budget yesterday
along with your good self, and he was saying to
me that businesses had asked for fifty percent. Twenty percent
seems on the low end.

Speaker 2 (03:19):
Well it's still more than nothing.

Speaker 1 (03:24):
You're you're, you're so easily pleased.

Speaker 2 (03:28):
I am easily please.

Speaker 1 (03:31):
Okay, well we'll just take it's more than nothing. And
there there it is, Robin, I really appreciate it. Thank you,
look after yourself. It's Robin Walker, Deloitte Tax Partner. For
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