New Goverment's Tax Plan Revealed

December 10, 2008 New Zealand Taxation  No comments

The new government released their new personal tax plan on Tuesday 9th of December, featuring altered tax levels and earning brackets.

The new personal tax plan is set to come into effect on the 1st of April 2009, with changes on the same date of each of the next three subsequent years.

The first year saw will see the earnings brackets change to $0 to $14,000, $14,001 to $48,000, $48,001 to $70,000 and above $70,001. The personal tax rates will become 12.5%, 21%, 33% and 38% respectively.
On the 1st of April 2010, the brackets will become $14,000 and under, $14,001 to $50,000, $50,001 to $70,000 and $70,001 and above. The tax rates for each bracket will be 12.5%, 21%, 33% and 37%.
The 1st of April 2011 will not see a change in the income brackets but a drop will be seen in the tax rate of the $14,001 to $50,000 earners, who will now face a tax rate of 20%.

From the 1st of April 2009, a $10 tax credit will be given to individuals earning between $24,000 and $44,000, called the Individual Earners Tax Credit (IETC). Those earning above $44,0000 will still see a tax credit, but it will be lowered by thirteen cents per dollar earned above the threshold. The tax credit will rise to $15 in 2010. To be eligible for the IETC an individual must not be receiving any form of benefits from the government already other than student allowance.

Finance Minister Bill English said in a press government press release that in the short term the new tax changes will place extra money in the pockets of New Zealanders, and in the long-term will encourage individuals to invest int heir own skills to earn larger sums of money.