NZ Government’s 2024 Annual Budget
I think we may all agree with this Budget; it gave some relief that the Government is putting money into the areas that are needed most: our education system, health, law & order, the roading & transport infrastructure within New Zealand and getting the Country into better shape, while at the same time not overspending.
Interesting to hear Nicola Willis, the Finance Minister, still say they will be borrowing more to make the next three year budget promises because the Government has underestimated by $13.9 billion in dropped revenue. This was due to slower growth, causing a reduction in business income tax and weaker private consumption negatively impacting GST revenue, that the Government was anticipating to cover forward expenditure. Yet the Government expectation is to be back in surplus by mid-2028 and that will be the first time since 2019.
What areas may benefit you the most, as a business owner?
1. Red Tape
The new Ministry for Regulation will hopefully assist in reducing red tape that typically holds businesses back and it will help improve innovation. I suggest start being vocal and write to this Ministry wherever you get frustrated with regulation and bureaucracy as it’s only just been formed, and they need to know where businesses are being held back. It’s a government department set up to improve our country’s productivity and innovation.
2. Families
If you have a young family, the new Family Boost childcare rebates for those who earn less than $180,000 a year will get up to $150 a fortnight extra – although that has come at the cost of scrapping the previous Governments extension of free ECE (early childhood education) to 2-year -olds. With the other tax benefits, these families can get up to $250 extra a fortnight. Refer to the below tax calculator to work out your extra tax savings & rebates based on your personal circumstances.
3. Education
Education gets $2.9 billion in funding for new classrooms, teachers, IT, and other initiatives. Of which this includes the $88m that had already been earmarked to continue with the Christchurch rebuild of schools.
4. Media
The media may settle with the doom and gloom as New Zealanders have a little more spending money and this may assist with some economic confidence.
5. Brain Drain
With the extra money for young families, third year University fees free, more money in the pocket for the lower to medium earners (often young) may stop them from heading over to Australia and reduce the brain drain issue that has occurred over the last year. This is currently at levels of 2009 apparently.
6. Combined Income Threshold
The combined Income threshold changing from $70,000 to $78,000 (tax rate at 30%) and lifting the independent earner tax credit threshold to $70,000 from $48,000 is a great move and will allow, when we are distributing shareholder salaries to you, as the shareholders, a tax savings of $40 a fortnight (annual $1,040) per person. Even earners up to $180,000 will get a tax savings of $40 a fortnight.
View Nationals Budget tax calculator to find out your estimated tax savings here:
Many clients are affected by the tax increase announcement from 1st April that individual income over $180,000 will be taxed at 39%. So in effect, this coming year tax will be going up if compared to previous years. Over the past year, we have spent considerable time working through the best outcome for you. Please contact us if you’d like to discuss this further.
Our tax plans that we do for you in August, January and May, to ensure you have no tax surprises are more imperative this coming year than ever before. This is something we do automatically, and you may not be aware of it, so have a chat with us, and we’ll go over your specific tax plan with you.
One of the best articles with a good overview of the Budget that I’ve read is written by Wolters Kluwer, one of our Training & Education Providers. Below is a link to their highlights and summary:
If you have any further questions or concerns, please feel free to contact one of our friendly team.