As promised in the 2023 Election Campaign, the coalition Government has delivered tax cuts. These tax cuts will apply to everyone and it is IMPORTANT TO NOTE that these will also apply to your PIR (Prescribed Investor Rate) for your PIE (Portfolio Investment Entity) investments (eg in your portfolio and KiwiSaver, and if you have a PIE Cash or Term Deposit investment with your bank. See the note below about what you will need to do if it affects you.
The tax changes are as a result of moving the tax thresholds for each tax rate to kick in. For most people there will be a tax cut - which we encourage you to add to your savings (or mortgage payments) if you can.
These changes will apply from 31st July 2024.
Existing Tax Threshold | New Tax Threshold | Tax Rate |
|---|---|---|
Up to $14,000 | Up to $15,600 | 10.50% |
$14,0001 - $48,000 | $15,601 - $53,500 | 17.50% |
$48,001 - $70,000 | $53,501 - $78,100 | 30.00% |
$70,001 - $180,000 | $78,101 - $180,000 | 33.00% |
$180,000+ | $180,000+ | 39.00% |
What we need you to do
Please contact us to update your tax rate and your PIR rate if your income is between the following amounts: (including any gross superannuation income if you are receiving NZ Super and working)
$48,000 and $53,000
$70,000 and $78,100
We will be doing some mapping internally based on the information we have, but it would be helpful if you could let us know if you feel that your tax rate needs to change.
Calculator to work out how much extra you will receive in your pocket after 31st July 2024:
https://budget.govt.nz/taxcalculator/
Other important notes
The Trustee tax rate increased to 39% from 1 April 2024. We have contacted all our clients that we believe that this affects, but ensure that you let your other financial institutions know if this means that your tax rate increases. It will not affect you if your trust has less than $10,000 per annum income, or if you have losses that your accountant offsets for you.
The new tax thresholds also apply to Fringe Benefit Tax (FBT), Employer Superannuation Contribution tax (ESCT) and Residential Withholding Tax (RWT).
The First Home Grant for first home buyers under certain income thresholds has been removed.
The Brightline Test for property investors has been reduced from ten years to two years from 1st July 2024.
Residential Property Interest deductions are claimable as follows.: From 01/04/24 - 31/03/25 - 80% of the interest can be claimed. From 01/04/25 - 100% of interest can be claimed.
There are changes to the Independent Earner Tax Credit (IETC), In-Work Tax Credit (IWTC) which may affect your family members.
New allowance - Family Boost from 1 July 2024 - parents and caregivers will be a eligible for a partial reimbursement of their early childhood education fees up to a maximum fortnightly payment of $150. The maximum payment slowly reduces for families with incomes between $140,000 and $180,000 - with no payment over a family income of $180,000.
