Home > Updates > Tax policy changes ahead – what we can expect from the new government
New Zealand finally has a government, 45 days after the election. But what does this new coalition government of National, ACT and New Zealand First mean for tax policy?
In a nutshell, the coalition has agreed that:
National’s tax cuts which will be delivered through a combination of adjustments to tax brackets, increases in tax credits for those on modest incomes, tax rebates for childcare costs, and increases to Working for Families payments will continue. However, these cuts will no longer be funded through a tax on foreign buyers; the money will instead be found through reprioritisation and other revenue gathering.
The proposed tax threshold adjustments (which should take effect from 1 July 2024) are as follows:
The FamilyBoost childcare rebate, worth up to $150 per fortnight, for families with young children will also be implemented with effect from 1 July 2024. This rebate pays up to 25% of childcare costs up to $300 a week. The rebate will be paid directly to parents as part of their take-home pay and applies to all families with childcare costs who earn up to a maximum income of $180,000.
The proposed maximum rebate per fortnight under FamilyBoost is as follows:
Other changes to tax include extending the income eligibility threshold for the Independent Earner Tax Credit to $70,000 (up from $48,000), with abatement starting from $66,000 and increases to Working for Families.
Interest deductibility for rental properties will be restored. This change will be phased in at an accelerated level as follows:
The brightline test for residential property will be reduced back to two years with retrospective effect from July 2024. This means that properties acquired before July 2022 should no longer be subject to the brightline test at sale.
The Ute Tax will be removed by 31 December 2023.
We expect that the increase in the trust tax rate to 39% will proceed as proposed in the legislation introduced by the Labour Government prior to the election.
It is also likely that the expansion of GST to Airbnbs, food delivery services and ride-shares as introduced by the Labour Government will remain.
While not expressly mentioned in the coalition agreements, it is likely the following will be repealed or removed:
If you have any questions about the above, please contact the Tax Team at Nexia, or your usual Nexia advisor. If you are not already a Nexia client and you are looking for specialist tax advice or strategies for effective tax planning, contact us to explore how we can help.