NZ Payroll Community

Budget 2010 announced a comprehensive package of tax reforms. The Government has released a large amount of information in the form of fact sheets and media statements.  These include information on:

Personal tax cuts

All personal income tax rates will be cut from 1 October. See:

The Government’s media statement and Personal tax cuts fact sheet. Individuals and families can get an indication of how the Budget tax changes may affect them at www.taxguide.govt.nz.

GST rate lift and compensation measures

The rate of GST will increase from 12.5% to 15% from 1 October 2010, with compensation for certain groups, such as superannuitants, beneficiaries and others receiving government assistance also in place from 1 October. See:

GST and compensation fact sheet
NZ Super and Veterans Pension fact sheet

Company tax cut

The company tax rate will fall from 30% to 28% from the 2011–12 income year. See:

Company tax cut fact sheet

Lower savings tax

The top tax rate for most portfolio investment entities (PIEs), including KiwiSaver accounts will be reduced from 30% to 28% from 1 October. The other PIE rates will also fall to align with the new personal tax rates. See:

Savings tax changes fact sheet

Building depreciation

Depreciation deductions will no longer be allowed for buildings with an estimated useful life of 50 years or more, from the 2011–12 income year. See:

The Government’s media statement and Building depreciation fact sheet.

Depreciation loading

Businesses will no longer be able to claim 20 percent accelerated depreciation on new plant and equipment after Budget day. See:

Depreciation loading fact sheet

Working for Families rules strengthened

From 1 April 2011 people will no longer be able to use investment losses to reduce their income so they can claim Working for Families payments.  See:

Working for Families changes fact sheet

LAQC and QC changes

Loss attributing qualifying companies (LAQCs) and qualifying companies (QCs) will become flow-through entities for tax purposes. An issues paper on implementing the new rules will be released on this website later today. See:

LAQC and QC changes fact sheet

Thin capitalisation rules

The safe harbour in the inbound thin capitalisation rules will be reduced from 75 percent to 60 percent from the 2011-12 income year. See:

Thin capitalisation rules fact sheet

More funding for Inland Revenue to strengthen tax compliance

Inland Revenue will receive more funding to increase its audit and compliance activity around debt collection, the hidden economy and property transactions.  The GST rules will be changed from 1 April 2011 to prevent “phoenix” arrangements.  Under the changes, transactions between GST-registered persons involving land will be zero-rated. See:

The Government’s media statement and Tax integrity fact sheet.

See also:

The tax changes at a glance

More information:
A special report by the Policy Advice Division of Inland Revenue which explains the technical details of the tax package proposals will be published here later today, after Budget day legislation is introduced.

The full set of Budget 2010 documents can be found at: http://www.treasury.govt.nz/budget/2010