New government set to introduce tax reforms

Given one of the National Party’s big campaign promises was tax cuts, we can safely assume the new government will follow through on its proposed reforms. Any changes are unlikely to be before July 2024. So let’s look at the proposed new rates of income tax:

Income up to $15,600 a year 10.5% (previously 14,000)
From $15,600-$53,500 17.5% (previously 14,000 to 48,000)
From $78,100-$180,000 33% (previously 70000 to 180,000)
Over $180,000 39% (no change)

Other likely changes include a rise in the amount you can earn to qualify for the Independent Earner Tax Credit. The credit is currently available to people who earn between $24,000 and $44,000 a year. It’s worth $520 a year and reduces progressively for incomes between $44,000 and $48,000 a year, becoming nil when your income reaches $48,000.

The upper limit is to be increased from $48,000 to $70,000 a year, with the progressive reduction starting at $66,000. This would mean people with incomes between $44,000 and $66,000 will qualify for the $520 tax credit.

Other policies include a 25 percent rebate for childcare costs, worth up to $75 a week. This will be calculated on joint household incomes. The maximum joint income for getting the full rebate is to be set at $140,000.

Expect interest deductibility for rental properties to be restored, progressively rather than being reduced progressively as follows:
• 60% deduction in the 2023/2024 year
• 80% in the 2024/2025 year
• 100% in the 2025/2026 year

Depreciation for commercial building is likely to be scraped from the 2024/25 year as well as the proposed GST on digital platforms like Airbnb and Uber.

Also, the clean car discount is likely to be ditched, as is the Auckland regional fuel tax.

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