29 Jul 2020

National announces scheme to encourage new businesses

10:18 am on 29 July 2020

National is planning to launch a new scheme if elected into government that will offer cash incentives for New Zealanders who have lost their jobs due to Covid-19 to start their own businesses.

Missed the announcement? Watch it here

The BusinessStart policy would give successful applicants $30,000 through KiwiSaver savings, tax credits and taxpayers' funds.

National Party leader Judith Collins was in Lower Hutt today to announce the election policy - an addition to the JobStart policy that was launched in West Auckland in May.

During her speech, Collins said the country faces its worst economic downturn for 160 years.

"Right now, around 200,000 New Zealanders are on unemployment benefits.

"Another 400,000 jobs are at risk, being kept alive through the wage subsidy scheme, which ends on 1 September," she said.

She said BusinessStart would give people the freedom to be their own boss.

"All of us will know someone who loses their job. It could be you," Collins said, calling the policy a bold step forward.

Under the scheme, anyone who had lost their job since 1 March or in the months ahead will receive a $1000 voucher to get financial advice from a chartered accountant or registered financial advisor on their ideas, to put together a viable business plan.

From there, once the business plans are signed off BusinessStart recipients would receive:

  • Up to $20,000 of their own money from their KiwiSaver account to help get their business going.
  • At least $10,000 in tax credits to pay GST or provisional tax when the business starts making a profit.
  • A waiver from the Company Office registration fee of $130.
  • Free mentoring from advisers like chambers of commerce, employers and manufacturers associations and Business Mentors New Zealand from a new $10 million contestable fund.

BusinessStart would provide the basics for new businesses to get going, Collins said.

"No government ever creates jobs, you, the business owners of New Zealand, do that.

"National wants to back you, as you back yourselves and your mates to get this country working again."

Collins said National would also incentivise Business Start recipients to return their money to their KiwiSaver accounts when they could.

"Their future KiwiSaver contributions will be tax-free until they have repaid the amount they took out.

"The second thing we will do is if you have been made redundant, we will give you the entire taxed portion of your redundancy as a tax credit with the IRD. If your redundancy is say $150,000, that could be as much as $50,000 tax credit. You will then be able to use that to pay GST or provisional tax when you start making a profit."

Collins said given all the incentives it was offering, National was sure banks would compete to give people a decent finance package.

She said running a small business was still "not for the faint-hearted" - that was why contestable business mentoring fund was available.

"What we then want is for BusinessStart recipients to take on a mate using JobStart. That's another $10,000 if you do that."

Small businesses could grow much faster than large businesses, and that was of economic benefit, she said.

National said it would extend the proposed JobStart scheme to end in March 2022 rather than March 2021.

Money for the BusinessStart scheme would be part of the proposed $500 million cost of the JobStart scheme, taken from the Covid-19 recovery fund.

BusinessStart would begin on 1 November 2020 and run for through to the end of March in 2022.

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