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NZ Budget 2024: Key Highlights and Tax Changes
On Thursday, 30 May 2024, the Honorable Minister of Finance, Nicola Willis, unveiled NZ Budget 2024. This comprehensive financial plan outlines the government’s commitments and introduces several significant measures aimed at fostering economic growth, providing tax relief, and investing in public services.
Key Commitments in Budget 2024
Budget 2024 focuses on the following key areas:
- Fiscally Responsible Planning: The budget ensures that government commitments are met without compromising fiscal responsibility.
- Tax Relief: Average income households will benefit from up to $102 per fortnight in tax relief. Additionally, the new FamilyBoost childcare payments will provide up to $150 per fortnight.
- Public Service Investments: Significant investments are targeted towards healthcare, education, and law and order to enhance public services.
- Government Savings: Efficiencies across government operations will help fund tax relief and bolster frontline services.
- Infrastructure Investments: Strategic infrastructure investments are planned to stimulate growth.
- Fiscal Discipline: Measures are in place to return to a surplus and reduce national debt.
Proposed Tax Measures in NZ Budget 2024
NZ Budget 2024 introduces several changes, particularly in the realm of personal income tax and family support. Here’s a detailed breakdown:
Changes to Personal Income Tax Thresholds
Effective from 31 July 2024, the personal income tax brackets will be adjusted as follows:
| Current Brackets ($) | New Brackets ($) | Tax Rate |
|---|---|---|
| 0–14,000 | 0–15,600 | 10.5% |
| 14,001–48,000 | 15,601–53,500 | 17.5% |
| 48,001–70,000 | 53,501–78,100 | 30% |
| 70,001–180,000 | 78,101–180,000 | 33% |
| 180,001+ | No change | 39% |
As a guide, if you earn:
$78,000 or over – you will get a tax cut of around $1,040 a year*.
$60,000 – you will get a tax cut of around $800 a year*.
$50,000 – you will get a tax cut of around $360 a year*.
*Any working for families and other rebates will be on top of this.
Extending the Independent Earner Tax Credit (IETC)
From 31 July 2024, the IETC will be extended to individuals earning between $24,000 and $70,000 per annum. The IETC, a tax credit of up to $20 per fortnight, currently applies to those earning between $24,000 and $48,000 per annum. With the new upper limit, more individuals will benefit from this credit, which phases out gradually for incomes up to $70,000.
Note, you cannot get the IETC if:
- you or your partner are entitled to Working for Families Tax Credits
- you receive an income-tested benefit
- you receive New Zealand Superannuation
- you receive a Veteran’s Pension
- you receive an overseas equivalent of any of the above.
IETC is worked out on whole months. If you receive any of the above payments at any time during a month, you will not be entitled to IETC for that whole month, for instance.
Increasing the In-Work Tax Credit (IWTC)
This is a Working for Families related change. Starting 31 July 2024, the IWTC will increase by up to $50 per fortnight. This tax credit supports families with dependent children who are in paid work, providing additional assistance to low-to-middle income families. The minimum family tax credit (MFTC) will also see a slight increase, ensuring that recipients benefit from the new personal income tax changes alongside the full IWTC increase.
Introducing FamilyBoost
We feel this initiative has been ‘recycled’ in the budget. This has already been announced earlier as seen when we posted about this back in March on Family Boost Instagram Post and Facebook.
FamilyBoost is a new initiative designed to assist low-to-middle-income families with childcare costs for children aged 5 and under. Beginning 1 July 2024, eligible families can receive a partial reimbursement of early childhood education fees, up to a maximum of $150 per fortnight. Reimbursements will be issued quarterly, starting from October 2024. The maximum payment decreases for family incomes over $140,000 per annum, and families earning over $180,000 per annum are ineligible.
How to Apply: You will need to submit ECE invoices via my.IR every three months and get refunds – so make sure you get registered through the Inland Revenue !
Start saving those invoices from July so refunds can start from October 2024
Overseas Student Loan Interest Rate Change
From 1 April 2025, the interest rate for student loan borrowers based overseas will increase by 1%, bringing the new rate to approximately 4.8%. This increase will also affect late payment interest for both overseas and New Zealand-based borrowers. Legislation to formalize this change is expected to be introduced by the government.
Conclusion
Budget 2024 is a strategic financial plan that balances tax relief, public service investments, and fiscal discipline. By adjusting income tax thresholds, extending tax credits, and introducing new family support initiatives like FamilyBoost, the government aims to support households and stimulate economic growth.
For more detailed information, visit the Budget Government NZ website.
Business Like NZ has been providing professional yet affordable tax and accounting advice to the Auckland region for years! If you would like to discuss your business with us, please contact us at the office.
