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Budget Announcement – Tax changes

So last week the Government released its budget for the next year and there were a few tax changes announced.  Although not ground breaking there was a little extra in there for middle New Zealand.

Here is our breakdown of the changes...

Change in income tax thresholds

The Government is going to change the two lower income tax thresholds; however they will leave the actual rates the same.  At the same time they will be removing the Independent Earner Tax Credit which provided up to an extra $520 credit for those that earned between $24,000 and $48,000.

Current

Income Threshold Tax Rate
0 - $14,000 10.5%
$14,001 - $48,000 17.5%
$48,001 - $70,000 30%
$70,000 + 33%

Budget update

Income Threshold Tax Rate
0 - $22,000 10.5%
$22,001 - $52,000 17.5%
$52,001 - $70,000 30%
$70,000 + 33%

These changes would result in individual tax savings of up to $1,060 a year and the changes come into effect from 1 April 2018.

Working for Families

In addition to providing a small tax break to low and middle income earners the Government also announced a few changes to Working for Families and other support.

These include:

  • Increasing the Family Tax Credit rate for young children to the same level as 16 – 18 year olds
  • Increasing the abatement rate from 22.5 cents to 25 cents and decreasing the abatement threshold from $36,350 to $35,000.  So you will lose WFF credits at a faster rate, at a lower income level.
  • Increasing Accommodation Supplement payments
  • Increasing Accommodation Benefits for students who qualify for Student Allowances

Black Hole Expenditure

Black Hole expenditure is costs that businesses incur that cannot be claimed as a deductible expense or depreciated.  These can include initial investigations into the viability of a new project as well as some capital expenditure that cannot be depreciated. 

As part of the budget the Government announced that they would be looking at making more of these costs deductible if they don’t result in a new asset.   No changes have been made yet but they have released a discussion document and are seeking feedback until 6 July 2017.  If you would like to know more or engage in the discussion process you can do so here

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Guest Tuesday, 17 September 2019