Finance Minister delivers mini-Budget
Finance Minister Nicola Willis announced 2 tax proposals as part of the Governments mini-budget:
The bright-line test for residential property will be returned to a 2-year period from 1 July 2024. Removing this effective capital gains tax means that properties sold after 1 July 2024 will only be subject to the rule if owned for less than 2 years.
The depreciation deductions for commercial and industrial buildings will be removed from 1 April 2024.
These 2 measures will be included in the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill currently being considered by the Finance and Expenditure Committee.
The Finance Minister also confirmed the Government’s commitment to fully restoring interest deductibility for rental properties, with details of the phasing of this commitment to be the subject of an announcement in the New Year.
The Government’s decision to index the main benefits to CPI inflation from 1 April 2024 was also announced. This change is intended to protect the real incomes of benefit recipients while putting the benefit system on a more sustainable footing.
The Minister said “the Government is progressing work to deliver meaningful income tax reduction in next year’s Budget. This includes considering design and implementation advice for the delivery of our proposed Family Boost childcare tax rebate, and for delivering income tax relief to workers and their families”.
The Minister also noted that the coalition Government has further work underway to put New Zealand on a firmer financial footing, including:
enabling full cost-recovery for immigration processing
taxing online casino gambling operations
stepping-up the audit activities of the Inland Revenue
replacing the fees-free policy with a final-year-fees-free policy from 2025, and
improving the cost-effectiveness of the school lunch programme.
Source: First steps for tax and income relief announced, Beehive Govt website, 20 December 2023.