Tax Changes Likely But How Much And Who Will Be Affected?

John Key’s speech on 9 February 2010 signals the National Government’s intention to bring in a number of tax changes as part of the 2010 budget.

The quantum of those changes and who will be affected has been left to be announced on budget day being 20 May 2010.  Join Polson Higgs at our post budget breakfast on 21 May 2010 to learn how those tax changes will affect you.

Not surprisingly, Key has signalled the Government’s intention to cherry pick the work of the tax working group and while the Government has discounted a comprehensive capital gains tax or a risk free return method for taxing residential investment properties, the door is certainly open to tinker with the deductibility of costs relating to rental properties (depreciation and possibly interest being the likely targets) and with a clearly signalled likely increase in GST, the 2010 budget will impact on the majority of New Zealanders.

While a focus of Key’s comments is to put fairness back into the tax system and this includes reductions in the top personal tax rate, his ability to deliver these while still maintaining that perception of fairness across New Zealand taxpayers and within tight fiscal parameters, will be interesting to watch.

Our pick at this stage is some tinkering with the top marginal tax rate (currently 38%) being either a partial reduction or an increase in the threshold at which it applies.  While many would like to see the top rate reduced back to 33% in line with the trust rate (the top rate that applied before the Labour Government was elected) it is difficult to see how the National Government will achieve this in the current economic climate and maintaining the perception of fairness to all New Zealanders.  The lower and middle tax rates (currently 12.5% on income up to $14,000, 21% on income from $14,001 - $48,000, and 33% on income from $48,001 to $70,000) is still our pick for the area where the National Government can deliver tax savings to all.

With the suggestion of an increase in GST (which will broaden the tax base and raise additional revenue) it will be important that the Government is perceived as providing tax relief to all who are having to contribute to a higher GST and the only way to achieve this is to reduce tax rates which impact on the vast majority of New Zealanders.  The Government will also have to consider how New Zealanders who currently pay no or very little tax (those who benefit significantly from the Working for Families package on modest incomes), are not significantly disadvantaged with an increase in GST.

Polson Higgs will run a breakfast seminar on Friday, 21 May where Bill English’s budget from the previous day and in particular the tax issues which will impact on the business community will be analysed and considered.

Please fill in the form below to register for this seminar.
Places are limited,  please book early to avoid disappointment. 

Name:
Address:
Post Code:
Email:
Seminar location:	Christchurch Dunedin
Are you a client of Polson Higgs?	Yes No

<< Back to February 2010 Events Archive