Business Accountants: Understanding the New Government’s Tax Plan in New Zealand

 

With a new government in place, it’s natural to wonder about potential changes, especially when it comes to taxes. Given the coalition nature of the government, it’s essential to grasp how these tax policies might unfold and impact various sectors, including sole traders.


At Outside Accounting, our focus is on simplifying tax matters for sole traders. We’ve delved into the coalition agreements to decipher what the future might hold, so you can focus on your business without worrying about tax intricacies.


Here’s a breakdown of what you need to know:


Why the Focus on Income Tax? Heading into the 2023 election, tax issues took center stage, especially amidst concerns about inflation and rising living costs. One critical aspect discussed was income tax, particularly its implications as inflation erodes the value of earnings.


To illustrate, consider the median salary in 2013 compared to its equivalent in 2023, adjusting for inflation. Despite earning more, individuals end up paying a higher effective tax rate due to stagnant tax rate thresholds.


Changes Relevant for All Sole Traders


  1. Increasing Income Tax Thresholds: The government plans to raise tax rate thresholds by June 2024, effectively lowering the effective tax rate for earners.
  2. Increasing Eligibility for the Independent Earner Tax Credit (IETC): More individuals will qualify for this credit, offering tax relief to a broader segment of earners.

Changes Relevant for Sole Traders with Children


  1. FamilyBoost Child Care Tax Credit: A new childcare tax credit replaces the previous policy, providing rebates for childcare costs for families with children aged two and below.
  2. Working for Families Tax Credits: Existing tax credits for families with dependent children will see increases to provide additional support.

Changes for Sole Traders with Rental Properties


  1. Mortgage Interest Deductibility: Deductibility for rental property mortgage interest will be phased back in over time, providing relief to property owners.

Changes for Sole Traders with Business Vehicles


  1. Removal of Auckland Regional Fuel Tax: Auckland-based sole traders will benefit from reduced fuel costs as the regional fuel tax gets scrapped.
  2. Removal of the “Ute Tax”: Fees associated with vehicles emitting high CO2 levels will be eliminated.

Policies That Were Scrapped While many tax plans made it through, some proposals were abandoned, such as the reversal of the “app tax” and the foreign buyers tax.

How Outside Accounting Can Help Navigating these tax changes can be overwhelming, but with Outside Accounting, sole traders can breathe easy. Our comprehensive tax service ensures all tax obligations are met seamlessly, allowing you to focus on your business without the hassle of tax compliance.


For a nominal fee, we handle everything from income tax to GST, ensuring you stay compliant while maximizing tax savings. With our support, you’ll never have to worry about taxes again.


While these proposed changes offer insights into the future tax landscape, uncertainties remain. However, with Outside Accounting’s expertise, sole traders can navigate these changes confidently, knowing their tax affairs are in capable hands.



Your Outside Team

 

 

Need a bit of assistance with your business? Contact an Outside Accounting team member today and learn more about our fixed fees. You won’t regret it.

Aside from business consultation, we are business accountants Wellington who offer accountingbookkeeping, payroll services designed to help you achieve greater financial success.

You can click here to speak to a businessaccounting and bookkeeping firm. We will give you a call to know more about your needs. We will explain to you how we can improve your business. 

 

 

Contact 

Wellington Accountants | 

Business Accountants | 

Construction Accountants 

Property Accountants 

Contractor Accountants 

Hospitality Accountants |

Property Developer Accountants | Accountants Wellington | Wellington Accountant | Restaurant Accountants | Cafe Accountants | Business Consultation | Business Adviser

AddressLevel 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand 

Mail: PO Box 24-457, Wellington 6142

Phone04 889 2975

New Zealand Accounting, Bookkeeping & Property Business Consultancy Services | Wellington & Lower Hutt Xero Property Accountants Business coach business consultation business adviser

Business Accountants: Understanding Changes in Residential Property Taxation

Recent years have seen significant adjustments to the tax landscape, particularly concerning residential property. The government has responded to calls from various quarters to address investor demand in this sector. Notably, recent changes have been initiated to reverse tax policies affecting residential property, aligning with promises made by both National and ACT during their election campaigns.

Read More »