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May Newsletter

Key Updates & Changes for 2024


Tax season is nearly over, and with it comes the end of the rush to balance your books and tidy up your accounts. However, your responsibilities for the 2024 tax year are just beginning. Let's discuss some key dates and changes you need to be aware of.

 

Our May newsletter provides you with provisional tax due dates as well as outlines a series of 1st of April tax changes you need to be aware of that promises to shape New Zealand's future fiscal landscape for individuals, businesses, and the economy as a whole.



7th of May Provisional Tax Due

On May 7th, the third and final instalment of provisional tax for the 2024 tax year is due. Make sure you're prepared!

 

If you use the standard or estimation option, you'll generally pay 3 instalments of provisional tax a year. Here are the key dates as provided from IRD.



Non-standard balance dates

If you do not have a standard balance date of 31 March, and you use the ratio option or standard/estimation option, the due dates for your instalments will be different to the ones shown in the tables above. To find the due dates that apply to you, follow these steps:

 

  • Log into myIR.

  • Open the income tax tile

  • Select 'View' provisional tax to see your due dates.

 

You can view all important provisional tax dates here on the IRD website.



PIE and other income information

2024 individual tax returns can not be filed until all reportable income has received and filed with IRD. If you have income from Kiwisaver or any other portfolio investment entity (PIE) income information it will need to be included in your tax return.

 

This information is made available by your providers around mid-late May.

Make sure to download these statements, save it somewhere safe, and send it to us with your 2024 documents.


Provide us with your 2024 information

Although we have access to much of your accounting information in your Xero/MYOB, there are a number of questions that we need to address each year. Completion of the end of year checklist helps us to ensure that we prepare complete accounts.

 

Please use the following link to complete our annual online checklist and upload any relevant documentation.


RWT exemption applications

IRD announced on 22 April 2024 that customers and their tax agents can now apply for an exemption from paying resident withholding tax (RWT) in myIR.

 

Find out who is eligible to apply here -


 

1st of April Tax changes

A new financial year brings new tax rules that are likely to effect you and your business. Here is an outline of some of the top changes being made this year.


Minimum Wage Increase

On the 1st of April minimum wage increased to $23.15 an hour, an increase of 45 cents an hour from the existing hourly rate of $22.70.


Trustee Tax Rate Increase

One of the big announcements out of Budget 2023 was the increase of trustee tax rate from 33% to 39% for the 2024–25 and later income years.

The last government introduced a Tax Bill on 23 May 2018 as part of their budget proposing an increase in the Trust Tax rate to 39%. The Tax Bill expired and was not passed into effect prior to the election, however, Finance Minister Nicola Willis confirmed on 12 February 2024 that the Trust Tax rate will in fact increase to 39% from 1 April 2024.

 

There are measures on place to mitigate over-taxation, including:

 

  • Retaining the 33% rate where trustee income for the income year does not exceed $10,000 (after deductible expenses);

  • Targeted rules for deceased estates and trusts settled for disabled people; and

  • Exclusions for energy consumer trusts and legacy superannuation funds.

  • A measure to buttress the 39% trustee tax rate by taxing beneficiary income derived by certain close companies at the 39% trustee tax rate.  

This Special Report outlines new rules for trusts:


We will work with our clients to ensure that any changes to your tax planning or business structures are within the confines of the guidance provided by Inland Revenue.


Building Depreciation

The ability to claim depreciation on non-residential buildings has been removed… again.

The previous removal of claiming depreciation on most buildings occurred in 2010, it was decided that the depreciation rate for buildings with an estimated life of more than 50 years would be set at 0%. However tax changes reintroduced the ability to depreciate deduction for non-residential buildings for the years 2021-2024 income years.

 

While most enjoyed this short return of deductibility, it has been announced that the depreciation rate for non-residential buildings has returned to 0% as of 1st April 2024. Take note as this may affect your 2025 tax return.

 

IRD’s Interpretation Statement provides guidance to building owners on claiming depreciation on buildings. It considers the meaning of 'building' for depreciation purposes and the distinction between residential and non-residential buildings.



Interest Deductibility and Bright-line test

It was more than just property investors that the previous government affected when they changed the rules on the ability to deduct interest on rental property loans, as well as increasing the Bright line test from two years to five years, then to 10 years.

 

Finally some good news, property owners will be glad to hear that interest deductibility for rental properties will be restored on a phased-in approach over the next two years as follows:

 

  • 80% deductible in the 2024/2025 income year

  • 100% deductible from the 2025/2026 income year (full deductibility from 1 April 2025)  


The Bright-line test for investment properties will also return to two years with retrospective effect from 1st of July 2024. This means that residential property acquired before July 2022 should no longer be subject to the Bright-line test at sale.


GST Changes

The government announced the changes being made to GST, a notable change is the introduction of an “app tax” which sees operators facilitating the sale of ‘listed services’ must collect and return GST of 15% when the service is performed, provided, or received in New Zealand. This will apply whether the seller is GST-registered or not.

 

An online marketplace is an electronic platform (like a website, app or internet portal) through which sellers can supply goods and services to customers. They are sometimes known as digital platforms.

 

Facilitators that offer ridesharing, food delivery or short-term accommodation services will now need to charge GST, even if the underlying owner/driver is not GST registered and makes under $60,000 per year.

 

You can view this webinar that outline all GST changes that have come into effect on 1st April 2024



 

What we can expect…

A change in income tax rates

The new government intends to change the tax rate thresholds from 1 July 2024. While there is still speculation around what the changes in tax rate and tax rate thresholds could be, in The National/ACT Coalition Agreement, parliament states to “Ensure the concepts of ACT’s income tax policy are considered as a pathway to delivering National’s promised tax relief, subject to no earner being worse off than they would be under National’s plan.”

 

A tax bracket change will likely to be confirm when then Budget is announced on 30th May 2024, the with change of tax rates coming into effect from 1st July 2024.


Budget 2024

Budget day has been confirmed as 30 May 2024. As mentioned above, this is likely to be the day that we find out new personal tax rate thresholds. It will also be the day when we get to understand the direction the new Government will take our tax polices.


Included in the Budget is a ‘revenue statement’, setting out Parliament's intended approach to tax. We will also see the release of the tax and social policy work programme, giving us an insight to the tax policy development and what will be chosen to focus on over this Parliamentary term.



We're here to support you through these changes and look forward to another successful tax year together!

 

Warm Regards,

Dennis Curin & Associates

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