Budget 2010
Welcome to our Budget 2010 newsletter.
The Budget was perhaps the most significant in the last 20 years or so, with bold structural changes, realignments and an impact that will be felt by all New Zealanders. Businesses, individuals, and consumers will all have to adapt to the new 'rules' and consider how the Budget measures will change their decision-making.
Read on to learn about how the changes will impact on you...also visit our website for simple to read Tax Factsheets.
Tax Cuts for all Individual Taxpayers
Personal tax rates for all income bands are falling from 1 October 2010:
| Old Rate |
New Rate |
|
| $0 to $14,000 |
12.5% |
10.5% |
| $14,001 to $48,000 |
21.0% |
17.5% |
| $48,001 to $70,000 |
33.0% |
30.0% |
| $70,001 plus |
38.0% |
33.0% |
Virtually every New Zealander will have more cash in the pocket from their salaries, wages, Super or Benefit. To check out how the tax cuts affect you, visit the Tax Guide website.
GST Rises to 15%
GST increases from 12.5% to 15% from 1 October 2010. For most New Zealanders, the rise in GST paid on goods and services will be significantly less than the compensating tax cuts, Benefit and Super increases.
GST & System Issues
You need to ask yourself now - can our systems handle the GST rate rise? Those of you on systems like Xero will be fine as the system will be modified to take this into account, however other systems like MYOB will need to be upgraded and if you are not on a support contract then this would result in you needing to purchase an upgrade. Time for a change?
Contact Julie if you want to talk about matters relating to system and process changes required by the GST rise.
Company Tax Rates to 28%
Company tax rates are decreasing from 30% to 28% from 1 April 2011 to promote productive investment in the NZ economy. This was a significant move by the Government and puts us a step ahead of the foreshadowed Australian corporate tax rate fall to 28%.
Depreciation Changes
After budget day there is no longer a 20% uplift on depreciation rates for any new assets purchased. This means that all assets purchased regardless of whether they are second hand or brand new will be depreciated at the same rate.
One for property investors or owners of commercial property – from the 1st of April 2011 landlords and businesses are no longer able to claim depreciation on buildings which have an estimated useful life of 50 years or more.
Boost for Savers
The Government is encouraging you to save money. From 1 October 2010 most PIE income (most Kiwisaver schemes are PIE’s) will be taxed at a maximum rate of 28%. Tax on Bank interest received will be aligned with marginal tax rates.
The budget has delivered a number of significant changes for individuals and businesses - only some of which are highlighted here. If you would like to discuss any aspects of the budget or plan for how this will impact on you or your business, please contact either Julie or Richard.
Until next time,
Richard and Julie Francis
Directors, Francis Consulting
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