The NZ budget was released yesterday. The budget was anticipated to be a ‘no surprises – business as usual’ budget but it actually contained a few unexpected changes.
The key points you need to know are:
- A new border clearance levy payable by those leaving and entering NZ. The levy will be approximately $6 for a departing person and $16 for an arriving person. The funds will be utilised to bolster biosecurity and customs operations
- In a bid to take the heat out of the property market, the tax rules relating to property have been boosted with the introduction of a new two year rule on property that is bought and sold. Importantly this ruling is relevant to both NZ residents and non-residents. Any gains on properties sold within two years will be taxable with an exception for the main home. In addition, IRD numbers will be required by all property purchasers (both residents and non-residents). Inland Revenue has additional funding to focus on tax compliance and enforcement in the property area. History shows that for each $1 invested in tax compliance returns $7.80 in additional revenue.
- Child poverty is an area of focus with benefits to increase by $25 a week and increases of around $12.50 per week under the Working for Families scheme. Solo parents, will be expected to be ‘work ready’ for 20 hours per week once their youngest child reaches the age of 3.
- $122M in housing initiatives. This includes making additional crown land in Auckland available for housing.
- A further $687M to fund early childhood, primary and secondary education.
- A further $1.72B in healthcare. This takes healthcare up to 21% of total Government spending.
- The $1,000 kick-start sign up incentive for Kiwisaver has been abolished with immediate effect.
- Greater flexibility and discretion from Inland Revenue to deal with child support debt in a ‘fair and reasonable’ manner.
- ACC levies have been reduced by with further reductions of $375M anticipated in 2016 and $120M in 2017.
- $939M from the Future Investment Fund to be spend on Ultra-Fast Broadband infrastructure, rural broadband, rail infrastructure, highways and cycleways.
- $22M in new grants to encourage plantings in the forestry industry
- $25M to support and establish Regional Research Institutes
Looking ahead to future years, the Government has stated five key fiscal priorities:
- Returning to surplus and maintaining surpluses
- Reduce debt to 20 of GDP by 2020
- Further reduce ACC levies
- Reduce income taxes from 2017
- Using any surplus funds to reduce debt faster