Linkedin
Facebook
Email
more
The Budget released on 30 May 2024 revealed no major surprise tax announcements.
The government held true to its commitment to provide tax relief to middle income households by adjusting the personal income tax brackets.
The changes initially planned for 1 July 2024 were delayed by a further 30 days to 31 July 2024 to provide payroll providers with time to transition and update their system.
There were also welcomed announcements increasing the independent earner tax credit (IETC), in-work tax credit (IWTC) and a new FamilyBoost program. These changes will allow taxpayers some extra cash in their wallets to curb some of the cost-of-living increases.
| Existing threshold (to 30 July 2024) | Proposed threshold (from 31 July 2024) | Threshold rate |
|---|---|---|
| $0 - $14,000 | $0 - $15,600 | 10.50% |
| $14,001 – $48,000 | $15,601 – $53,500 | 17.50% |
| $48,001 – $70,000 | $53,501 – $78,100 | 30% |
| $70,001 – $180,000 | $78,101 – $180,000 | 33% |
| $180,001+ | $180,001+ (No change) | 39% |
Independent Earner Tax Credit (IETC)
The IETC offers individuals up to $10 per week, provided they do not receive an income-tested benefit, NZ Superannuation, or Working for Families tax credits. Currently, the IETC applies to earnings between $24,000 and $48,000, with abatement starting at $44,000. This threshold will be adjusted, increasing the applicable earnings range to $24,000 to $70,000, with abatement to begin at $66,000. The amendment would apply from 31 July 2024 onwards.
In-Work Tax Credit (IWTC)
The IWTC operates as part of the Working for Families regime. It is intended to encourage low-to middle-income working families to take up and stay in employment by providing a boost to the family’s income in the form of a tax credit once members begin working.
The current IWTC for a family of up to three children is $72.50 per week ($3,770 per year) and will increase by $25 per week to $97.50 per week ($5,070 per year). The increase would apply from 31 July 2024 onwards.
FamilyBoost
FamilyBoost is a rebate program enabling households earning up to $180,000 to claim up to 25% of their weekly childcare fees, up to a maximum of $75 per week (or $975 every three months). The rebate amount decreases for household incomes between $140,000 and $180,000.
The Familyboost is paid on a per household basis (not per child) with application for the FamilyBoost can be made at the end of each quarter. The first eligible quarter would be from 1 July 2024 to 30 September 2024.
But wait, there's more!
In the midst of public sector job cuts and losses, Inland Revenue has thus far remained unscathed and in fact has received additional funding from the government. The funding is to assist with increasing their tax compliance activities, as well as tackling compliance by overseas-based student loan borrowers (including those returning to or visiting New Zealand).
The additional funding is set at $29 million per year for the next 4 years, totalling $116 million and covers up to the 2027/2028 government year.
To support the compliance focus on student loans, the interest rate charged on an overseas-based borrower’s student loan will increase by 1%, as will the late payment interest rate charged on unpaid amounts from 1 April 2025.
Additional funding has also been received for Inland Revenue to develop a crypto-asset reporting framework which will assist Inland Revenue with their enforcement of taxpayers deriving income from crypto assets. Additional revenue is anticipated from the 2027/2028 income year onwards.
