We don’t yet know exactly how the new National-led coalition government will be formed. But we do know that National pledged to make some major changes to tax if it came into power. Here are some of the changes that could affect you:
Tweaks to tax brackets
National has proposed changes to tax brackets, designed to adjust for inflation and boost incomes:
Restored interest deductibility on rentals and a two-year bright line test
On investment properties, National has said it will gradually reinstate 100% interest deductibility. This will happen in increments over the next three years. The bright line test, which is currently set at 10 years, would be reduced to two years.
FamilyBoost and Working for Families
FamilyBoost is a new initiative that would provide a rebate for childcare costs of up to $150 a fortnight, reducing for higher incomes.
National has also proposed an increase to the existing Working for Families in-work tax credit. Together with the new tax brackets, National says a couple with young children, with a household income of $120,000, would have up to $250 a fortnight more in hand.
No more clean car discounts
National says the clean car rebate and feebate system will be scrapped at the end of 2023. Instead, the party plans to support the transition to EVs by expanding the public charger network, adding 10,000 extra charging stations by 2030.
You can read more about National’s tax plan here.
ACT and NZ First may yet have their say on taxes
ACT has its own tax plan which includes a two-bracket income tax system, and the party will have an influence on the final decisions regarding tax brackets and rates. It's not yet clear whether National and ACT will need to strike a deal with New Zealand First, but if they do it may mean further negotiations on tax changes.
We’ll keep you posted on the changes that will impact you
We will be watching closely as the new Government makes decisions on taxes – and we’ll keep you updated. If you have questions about what new taxes could mean for you, your trust, or your business, we’re here to help.
Drop us a note or give us a call, we’d love to hear from you.