Great News for you Investment Portfolio with us

Higher net returns will be achieved through the lowering of the company's tax rate by 2% on 1 October 2010.

Following on from the Budget news in our last newsletter, it's nice to see the Superannuitants getting an increase in net income.   The reduced tax gives you more ability to save for retirement or repay debt earlier than planned.  

If you consume more, you will pay more GST than in the past. The tax reforms are designed to not encourage more spending and encourage more savings in my view to help with economic growth and investment in the economy through KiwiSaver and other vehicles that quality such as Portfolio Investment Entities.

 

Tax

  • GST will increase from 12.5% to 15% from 1 October 2010.
  • All personal income tax brackets fall, with the top rate levied on income over $70,000 per annum dropping from 38% to 33% from 1 October 2010.

 

Personal Income Tax Rates

Income Current Rates New Rates
$0 - $14,000 12.5% 10.5%
$14,001 - $48,000 21.0% 17.5%
$48,001 - $70,000 33.0% 30.0%
Over $70,000 38.0% 33.0%

  • Benefits, including Superannuation, will be increased by 2.02% on 1 October 2010 to compensate for the GST rise.

 

New Zealand Superannuation and Veterans Pension fortnightly payments (net after tax)   

Income Current Rates New Rates Increase
Single living alone $636.24 $667.50 $31.26
Single sharing $587.30 $615.34 $28.04
Married couple (each) $489.42 $511.06 $21.64

  • Resident withholding tax rates applying to interest earned through a bank account will be reduced so they align with the new personal tax rates from 1 October 2010. There is no change in Independent Earner Tax Credits, and Employer Superannuation Contribution Tax rates will automatically align with the new personal tax rates.
  • Fund withdrawal tax will not apply to withdrawals relating to employer contributions made after 01 October 2010. However, it will continue to apply to withdrawals relating to employer contributions made before 1 October 2010. 
  • The company tax rate will fall from 30% to 28% from the 2011/12 tax income year. There will be a two-year transitional period for imputing dividends at the existing 30% rate.
  • The top tax rate for most portfolio investment entities (PIEs) - including KiwiSaver accounts - will be reduced from 30% to 28% from 1 October 2010.Other PIE rates will also be reduced to align with the new personal income tax rates. 
  • The tax rate for life insurance policy holders and widely-held savings vehicles like Unit Trusts and Superannuation Funds (non-PIEs) will also reduce to 28% from the 2011/12 income year. 
  • Loss attributing qualifying companies and qualifying companies will become flow-through entities for tax purposes for income years starting on or after 1 April 2011.

 

  Property Investment 

  • Landlords and businesses are no longer able to claim depreciation on buildings that are expected to increase in value.
  • Rules around loss attributing qualifying companies, often used by property investors to reduce their tax payments are being tightened. 
  • Depreciation deduction will be removed for buildings that have an estimated useful life of 50 years or more from the 2011/12 income year.
  • The current 20% depreciation loading on new plant and equipment will be removed for assets purchased after 20 May 2010. 

Back to Top