Report on Budget 2015 by Geoff Hurst CA
Last Thursday the current National led Government released its 7th budget. It was definitely an interesting budget from National that continues its policy of fiscal restraint but also introduces some measures to assist low income families and tax cuts for all in the form of ACC levy reductions. The Government was aiming for a budget surplus this year but a deficit of $684m is now anticipated, due to lower tax revenue collected because of low inflation and economic impacts from commodity price drops. A summary of key tax/business points from Budget 2015 is as follows:
Economy - The Government anticipates a solid period of growth for NZ economy over the next four years with average growth predicted at 2.8%. National is pleased with its record on job creation, in 2011 it was forecast that 170,000 jobs would be added by June 2015 and this number has been surpassed. By mid-2019 the unemployment rate is expected to drop to 4.5%. Annual CPI inflation is only 0.1%, which means less tax revenue for the Government does. A small budget surplus is still expected for next year with increasing surpluses providing possible scope for income tax cuts in following years.
Property Transactions – From 1 October 2015 any properties (excluding family home, inherited property, and property transferred as part of a relationship property settlement) that are brought and sold within two years will be subject to tax on any profits. IRD numbers will be required to be provided for property purchases, and non-residents will also have a NZ bank account and provide their countries equivalent of an IRD number. IRD will be given an extra $74m for compliance activity with $29m specifically for property transaction compliance.
ACC Levy Cuts – Levies will be cut by $375m in 2016 year and $120m in 2017 (cuts are subject to consultation) and this would mean annual vehicle registration dropping to a third of what it is now. Remember some reductions are coming 1 July 2015, so don't register your vehicle far past that date if you have registration due before then so you can take advantage.
Social Policy – Poverty reduction is attempted in the budget via increases in benefits and Working for Families for those on lower incomes. There are decreases in Working for Families for incomes at higher end of scale. There will be a significant write-off of Child Support debt in terms of penalties that had been applied in order is to encourage more payment of the actual debt.
Kiwisaver – The $1,000 kickstart on sign-up to Kiwisaver has been removed. If you weren't signed up to Kiwisaver as of 2pm last Thursday, you miss out– no sympathy by the Government for procrastinators!
You can find all the Budget 2015 information at: http://www.treasury.govt.nz/budget/2015
Economy - The Government anticipates a solid period of growth for NZ economy over the next four years with average growth predicted at 2.8%. National is pleased with its record on job creation, in 2011 it was forecast that 170,000 jobs would be added by June 2015 and this number has been surpassed. By mid-2019 the unemployment rate is expected to drop to 4.5%. Annual CPI inflation is only 0.1%, which means less tax revenue for the Government does. A small budget surplus is still expected for next year with increasing surpluses providing possible scope for income tax cuts in following years.
Property Transactions – From 1 October 2015 any properties (excluding family home, inherited property, and property transferred as part of a relationship property settlement) that are brought and sold within two years will be subject to tax on any profits. IRD numbers will be required to be provided for property purchases, and non-residents will also have a NZ bank account and provide their countries equivalent of an IRD number. IRD will be given an extra $74m for compliance activity with $29m specifically for property transaction compliance.
ACC Levy Cuts – Levies will be cut by $375m in 2016 year and $120m in 2017 (cuts are subject to consultation) and this would mean annual vehicle registration dropping to a third of what it is now. Remember some reductions are coming 1 July 2015, so don't register your vehicle far past that date if you have registration due before then so you can take advantage.
Social Policy – Poverty reduction is attempted in the budget via increases in benefits and Working for Families for those on lower incomes. There are decreases in Working for Families for incomes at higher end of scale. There will be a significant write-off of Child Support debt in terms of penalties that had been applied in order is to encourage more payment of the actual debt.
Kiwisaver – The $1,000 kickstart on sign-up to Kiwisaver has been removed. If you weren't signed up to Kiwisaver as of 2pm last Thursday, you miss out– no sympathy by the Government for procrastinators!
You can find all the Budget 2015 information at: http://www.treasury.govt.nz/budget/2015
