Business Accountants: Understanding the New Government's Tax Plan in New Zealand

WELLINGTON, New Zealand - March 4, 2024 - PRLog -- With a new government in place, it's natural to wonder about potential changes, especially when it comes to taxes. Given the coalition nature of the government, it's essential to grasp how these tax policies might unfold and impact various sectors, including sole traders.

At Outside Accounting, our focus is on simplifying tax matters for sole traders. We've delved into the coalition agreements to decipher what the future might hold, so you can focus on your business without worrying about tax intricacies.

Here's a breakdown of what you need to know:

Why the Focus on Income Tax? Heading into the 2023 election, tax issues took center stage, especially amidst concerns about inflation and rising living costs. One critical aspect discussed was income tax, particularly its implications as inflation erodes the value of earnings.

To illustrate, consider the median salary in 2013 compared to its equivalent in 2023, adjusting for inflation. Despite earning more, individuals end up paying a higher effective tax rate due to stagnant tax rate thresholds.

Changes Relevant for All Sole Traders

1. Increasing Income Tax Thresholds: The government plans to raise tax rate thresholds by June 2024, effectively lowering the effective tax rate for earners.
2. Increasing Eligibility for the Independent Earner Tax Credit (IETC): More individuals will qualify for this credit, offering tax relief to a broader segment of earners.

Changes Relevant for Sole Traders with Children

1. FamilyBoost Child Care Tax Credit: A new childcare tax credit replaces the previous policy, providing rebates for childcare costs for families with children aged two and below.
2. Working for Families Tax Credits: Existing tax credits for families with dependent children will see increases to provide additional support.

Changes for Sole Traders with Rental Properties

1. Mortgage Interest Deductibility: Deductibility for rental property mortgage interest will be phased back in over time, providing relief to property owners.

Changes for Sole Traders with Business Vehicles

1. Removal of Auckland Regional Fuel Tax: Auckland-based sole traders will benefit from reduced fuel costs as the regional fuel tax gets scrapped.
2. Removal of the "Ute Tax": Fees associated with vehicles emitting high CO2 levels will be eliminated.

Policies That Were Scrapped While many tax plans made it through, some proposals were abandoned, such as the reversal of the "app tax" and the foreign buyers tax.

How Outside Accounting Can Help Navigating these tax changes can be overwhelming, but with Outside Accounting, sole traders can breathe easy. Our comprehensive tax service ensures all tax obligations are met seamlessly, allowing you to focus on your business without the hassle of tax compliance.

For a nominal fee, we handle everything from income tax to GST, ensuring you stay compliant while maximizing tax savings. With our support, you'll never have to worry about taxes again.

https://www.outsideaccounting.co.nz