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This week's budget could raise investment by small firms but is unlikely to encourage the jet set to risk a business start up for a tax break, say experts.
Minister of Finance Michael Cullen's Budget announced a cut in the business tax rate from 33 per cent to 30 per cent, compared to the highest personal tax rate of 39 per cent.
Brahma Sharma, senior tax partner at KPMG, said it would be business as usual at larger companies in terms of dividend policy.
"But certainly the smaller companies I suppose there is more opportunity to say 'how much money do we need to extract for the shareholder employees'," Sharma said.
If owners took money out of the business they would have to top the tax paid up to their personal rate.
The difference between business and personal tax rates may not encourage wealthy people into business.
"A lot of the people who have investment income would tend to use family trusts for that," he said.
"I'm not sure that people will shift in that regard from a 33 per cent [trust tax] rate to a 30 per cent [business tax] rate. I think the trust structure does provide opportunities for people with investment income."
Portfolio Investment Entities also had the top tax rate reduced to 30 per cent from 33 per cent yesterday.
Deloitte tax partner Greg Haddon said the reduced business tax rate might encourage businesses to retain money for growth rather than distribute it to shareholders.
However, Haddon was not convinced people would choose to start a business to save tax.
"If they were keen to get into a business they would put it into a company, pay tax at 30 per cent and later instead of pulling the money they might sell the company if they can."
