The Government’s 2015 Budget announced May 21, 2015 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 IRD to pursue aggressive tax planning, property compliance and hidden economy initiatives.
For more information see the Budget 2015 announcements.
The Government has announced its intention to repeal the $1,000 kick start payment for new enrollees. The change is expected to come into effect from 2pm on 21 May 2015.
Media statement – KiwiSaver $1,000 kick-start payment to cease
Two measures were announced 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.
Media statement - Forgiving debt to encourage child support payments
Children in Hardship
A proposed amendment was announced to increase the rate of the in-work tax credit and increase the Working for Families tax credits abatement rate from 1 April 2016. This is part of wider changes proposed by the Government and more information on this can be found on the Budget 2015 website.
A proposed amendment was announced to clarify that payments made by the Ministry of Social Development to social housing providers to the extent the payments relate to the provision of social housing are GST-exempt. This is consistent with payments for residential accommodation more generally. This is part of a wider package on social housing initiatives and more information on this can be found on the Budget 2015 website.
Government has announced three tax-related proposals aimed at improving compliance in the property investment sector.
- 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.
- An extra Budget allocation to Inland Revenue for investigating aggressive tax planning, property compliance and hidden economy initiatives.
Media statement - Extra property tax measures
Fact sheet – Property tax measures
Full coverage of all Budget 2015 announcements can be found at http://www.treasury.govt.nz/budget/2015