Simon Bridges reveals COVID-19 tax relief plan he would use if elected Prime Minister

National leader Simon Bridges.
National leader Simon Bridges. Photo credit: Getty

Businesses that could demonstrate a revenue drop of more than 50 percent across two consecutive months due to COVID-19 would be eligible for GST cash refunds worth up to $100,000, if Simon Bridges is elected Prime Minister. 

The Opposition leader delivered a speech to Business New Zealand on Tuesday outlining how the National Party would respond to the coronavirus pandemic if it wins back power after the September election. 

He said National would offer the GST cash refunds to small businesses most affected by the COVID-19 economic fallout, and the refunds would be based off the GST they paid in the six months to January 1 this year. 

To receive the maximum refund of $100,000, a business would have needed to have revenue of approximately $667,000 for the six months to January 1. 

"We estimate this could benefit up to 160,000 businesses and save countless jobs," Bridges said. "If the business paid more than $100,000 in GST over that period, then they would be able to claim up to an additional $250,000 as a repayable loan over five years."

Bridges noted how the threshold to qualify for the scheme is tighter than the wage subsidy scheme, in both the size of the revenue decline - 50 percent as opposed to 30 percent - and for twice as long, two months as opposed to one month.

Based on the estimate of 160,000 eligible businesses, National expects the scheme to cost approximately $8 billion, or about 3 percent of GDP. 

National would also try to ensure businesses who invest will pay less tax.

Currently, if a business purchases a capital asset with a value of more than $5000, the business can depreciate that asset over its expected useful life, or take into account how much of its value has been used up, and claim it back from the Government. 

For example, if a business buys an asset worth $100,000 and it has an expected useful life of 10 years, it can claim $10,000 of expense each year, reducing its annual tax bill to the Government by up to $2800. 

National's plan will allow a business to speed that up and the amount will be increased. Businesses will be able to deduct the full value of a capital investment, up to $150,000, immediately - so, they won't have to wait as long to get the money back. 

The scheme will be in place for at least two years, and all businesses that invest in plant and machinery will receive the tax relief. 

The Government lifted the threshold from $500 to $5000 as part of its COVID-19 response. 

Business New Zealand chief executive Kirk Hope said National’s proposals are "sensible options".

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