Budget 2015 – No Surprises
BUDGET 2015 ANNOUNCED
The Government’s 2015 Budget announced today includes tax proposals aimed at supporting children in poverty, ensuring compliance with the tax rules and strengthening the tax rules. The Budget includes proposals to:
- address child support penalties debt;
- increase the in-work tax credit and the abatement rate from 1 April 2016;
- strengthen the tax rules for property;
- repeal the $1,000 KiwiSaver incentive payment; and
- clarify that payments made by MSD to social housing providers for the provision of social housing are GST-exempt.
Also included in the Budget is extra funding allocated to Inland Revenue to pursue aggressive tax planning, property compliance and hidden economy initiatives.
We know that Tradies are going to be looked at extremely hard with regards to the cash economy, and the IRD are asking anyone who does cash jobs to ensure they include this in their income, and to make a voluntary disclosure to them regarding past years returns. If you have any questions, do let us know.
The repeal of the $1000 kick start starts as of 2pm today, so for anyone thinking of signing up to get your $1000, its too late.
TAX RULES ON PROPERTY
The tax rules on property have been tightened up, and start from October 1st this year. The proposals, which are not aimed at the main family home, include:
– A New Zealand IRD number will be required as part of the land transfer process.
– As part of the land transfer process, non-resident buyers and sellers must also provide their tax identification number from their home country.
– Non-residents will also need a New Zealand bank account before they can get an IRD number in order to buy a property.
– Gains from residential property sold within two years of purchase will be taxed, unless the property is the seller’s main home, inherited from a deceased estate or transferred as part of a relationship property settlement.
Two measures were proposed today to address child support debt. These aim to encourage liable parents to re-engage with their child support obligations and strengthen Inland Revenue’s ability to work with parents to help control and manage their child support debts:
- extending the write-off of monthly incremental penalties to more parents. This will apply from 1 April 2016; and
- an amendment to the penalty write-off tests to adopt a more pragmatic “fair and reasonable” test. The “fair and reasonable” test is proposed to apply on a discretionary, case-by-case basis from 1 April 2016.