Tax changes expected this year

Written By Jasmine KM
 

This year, significant tax changes are expected as the new Government implements its policies and progresses some from the previous administration. Key anticipated changes include:

1. Income Tax Threshold Changes:

  • Finance Minister Nicola Willis hinted at personal tax rate changes in the upcoming Budget.

  • The National party proposed adjusting income tax brackets to counteract inflation, effective from July 1. This includes increasing the thresholds for various tax rates, e.g., the 17.5% rate threshold from $14,000 to $15,600.

2. Impact on Related Taxes:

  • Changes in personal tax rates will influence other taxes like fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), resident withholding tax, and prescribed investor rates (PIR).

  • Adjustments to tax brackets will necessitate recalculations for these taxes, potentially lowering rates for individuals close to the threshold.

3. Bright-line Test Modification:

  • The bright-line test for property capital gains tax will revert to two years from July 1, and properties bought before July 1, 2022, will be exempt.

4. Interest Deductibility:

  • The ability for investors to deduct home loan interest from rental income for tax purposes will gradually return, though the exact start date is yet to be announced. This reintroduction aims to improve cash flow for property investors.

5. Building Depreciation:

  • The Government plans to remove commercial building depreciation deductions, a move expected to have significant financial reporting implications and potentially introduce substantial liabilities to business balance sheets.

6. Trustee Tax Rate Change:

  • Despite expectations, the trustee tax rate change to 39% is proceeding, with the bill currently under review. The new rate will apply to trustees from April 1, with exemptions for estates and disability trusts.

7. App Tax:

  • The Government will introduce GST charges for platforms involved in ride-sharing, food delivery, or short-term accommodation, starting April 1. Individual owners or drivers will be affected even if they earn less than $60,000 annually.

  • Deloitte's Robyn Walker says people who have a house listed on Airbnb, for example, would need to decide whether to put their price up to cover the GST component.

Source: Stuff NZ

Jasmine KM
Previous

Upcoming GST Changes - App Tax
Next

Finance Minister delivers mini-Budget