With the new year underway, the government is taking action to address inflation and the cost of living. Here's a rundown of key tax changes you need to know about.
Proposed Income tax thresholds
The tax rates themselves will not change but the thresholds will increase. This means that your effective tax rate (percentage of total tax paid) will be lower.
These changes are expected to go live from the 1st of July 2024.
For more information about income tax thresholds, visit IRD website.
Proposed Independent Earner Tax Credit (IETC)
Currently, New Zealanders who earn between $24,000 and $48,000 in a tax year may be eligible for IETC tax credits up to $10 per week.
This provides tax relief for taxpayers who miss out on other government assistance like benefits or Working for Families payments.
Under new rules, New Zealanders who earn between $24,000 and $70,000 may be eligible for IETC tax credits.
For more information about the IETC visit IRD website.
Mortgage interest deductibility and the bright-line test
From 1 April 2024, mortgage interest deductibility for rental properties will be phased back in:
80% deductibility in 2024 / 25
100% deductibility in 2025 / 26
For more information about mortgage interest deductibility visit IRD website.
The bright-line test for investment properties is proposed to be reduced to two years from 10 years, with retrospective effect from 1 July 2024. This means that investment property acquired before July 2022 should no longer be subject to the bright-line test at sale.
Get in touch with us if you are considering selling your investment property to determine if the bright-line test applies.
Working for Families
The government is increasing Working for Families tax credits to help with the cost of raising children. Here's what has changed:
The Family Tax Credit rates have increased from $136 to $144 per week after tax for the eldest child and from $111 to $117 per week for a subsequent child.
The Best Start tax credit rate has increased from $69 to $73 weekly after tax.
For more information about Working for Families visit IRD website.
Contact Us
Contact Tim Doyle or Jane Evans today to discuss on 07 823 4980 or email us. Our office is in Cambridge, NZ, but distance is no problem. We have many international and national clients.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
