The 2023 Wellbeing Budget – What does this mean for businesses?

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Businesses were not mentioned much in the most recent budget, but we have collated the main points that we think would be of interest to you:

The Projections

  • The treasury is no longer forecasting a recession.
  • The Net Debt Forecast (effectively an estimate of New Zealand’s financial position and ability to manage debt) is set to peak at 22% of GDP in 2024 and fall to 18.4% of GDP in 2026/27.
  • Inflation is forecasted to drop to 3.3% in 2024.
  • Unemployment is projected to peak at 5.3% in 2025.
  • GDP growth is expected of 3.2% this year, 1% next year, 3% in 2026 and 2027.
  • The return to surplus for New Zealand has been deferred by one year to 2025/2026 (meaning the expected timeframe for NZ to get out of debt)

Summary Points

  • Trustee Tax Rate to change from 33 to 39% from April 2024 – This does not mean you should no longer have a trust – as this is still important to help protect your assets.
  • The tax rate change is also dependent on the election results and labour getting back into parliament.
  • Funding for Education Initiatives – The Government allocated $3.6 Billion to education initiatives, but the main ones that may help your business/employees Include:
    – $17.1 Million towards the apprenticeship boost programme.
    – $521 Million for further tertiary funding and training subsidies.
  • Parents will receive 20 hours of free early childhood education – this will be available from 1 March 2024. There are also increases in childcare funding which you can read about here.
  • New National Resilience Plan – The Government has initially allocated $6 billion to support the investment of medium to long-term infrastructures. The funding will first focus on the recovery post the recent weather events, then this will go towards strategic investments to develop long-term infrastructure.
  • The Government is removing the $5 prescription co-payment
  • Funding for Flood & Cyclone Recovery – The Government allocated $941 million of operating and $195 million of capital to the $889 million already provided towards the cyclone recovery. This funding is to help repair the flood and cyclone-affected areas and build protection against any future weather events.
  • Employees will receive KiwiSaver Contributions during paid parental leave – The Government will match the KiwiSaver ‘employer’ contribution to parents on paid parental leave.
  • $451 million will go towards three research and technology hubs in Wellington. Hopefully, this will help us access more systems and technology, which will have a flow-on effect to improve business productivity and efficiency.

You can read more summary points here.
Overall the ‘Support for Today, Building for Tomorrow’ Budget for 2023 has a new operating spend of approximately $4.8 Billion per annum, compared to $5.9 Billion in 2022.

Update on Inland Revenue Interest Amounts

As you know, paying your tax by the due date is important to avoid interest and penalties.
The interest rates are set by the Government and are based on market rates, so they can vary over time.
Click here to see the latest Debit/Credit use of money interest rates.
If you are a client and don’t think you can pay your tax on time, please contact us, as we may help you set up a payment arrangement to save on penalties.

Kiwisaver – Government Contribution Reminder

Just a reminder that if you want the full Government contributions to your KiwiSaver ($521.43), you’ll need to have contributed a total of $1,042.86 between 1 July 2022 to 30 June 2023. This doesn’t include employer contributions, government contributions, interest and any funds moved from an Australian retirement scheme.
You can check how much you have contributed to your KiwiSaver to date by contacting your KiwiSaver provider. It’s also a great chance to check with them that your Prescribed Investor Rate (PIR) is correct.
If you won’t reach the $1,042.86 from your employee contributions this year, you can make a voluntary contribution to top this up. See more about how you can make this contribution payment here.
Please note it can take up to 4 days for this transaction to be processed so you will need to make this voluntary payment by the 26th of June at the latest.