By Saurav Wadhwa on Wednesday, 31 July 2024
Category: Business growth

IBBZ Accounting Business and Tax Updates July 2024

Business and Tax Updates July 2024: IBBZ Accounting

Summary:

Since the beginning of the year, there have been numerous tax adjustments implemented for businesses, the most of which will take effect in July 2024. Let's recap the changes that are effective from July 2024 and explore further tax and business upgrades for 2024. We Deeply appreciate your trust in IBBZ Accounting for your financial needs. It's our honour to partner with you, delivering tailored accounting solutions to propel your business forward

Tax Updates

Changes Effective from July 1st, 2024

Other Tax Updates

PAYE Threshold Changes and Composite Tax Rates

The PAYE thresholds are changing starting from 1 July 2024, which is partway through the financial year. Because the threshold change occurs midway through the year, composite tax rates are introduced to handle the transition. These rates blend the new thresholds with the existing rates to accurately reflect tax obligations over the period from 1 April 2024 to 30 June 2024 (under the old thresholds) and from 1 July 2024 to 31 March 2025 (under the new thresholds). For the financial year beginning 1 April 2025, the tax rates will be fully aligned with the new thresholds, and there will be no need for composite rates. This means that for the next financial year, the rates will be straightforward and not blend old and new thresholds.

Current Threshold $

Entitlement

$0 - $14,000

10.5%

$14.001 - $15,600

12.82%

$15,601 - $48,000

17.5%

$48,001 - $53,500

21.64%

$53,501 - $70,000

30%

$70,001 – $78100

30.99%

$78,101-$180,000

33%

$180,001 Upwards

39%

Independent Earner Tax Credit

The threshold for the independent earner tax credit will take effect on July 31, 2024, therefore customers with incomes between $48,000 and $70,000 may not be eligible for the entire benefit this year. The reason for this is that the threshold was only raised partially during the year.

Current Threshold $

New Threshold $

Entitlement

$24,000- $44,000

$24,000 - $66,000

$10 a Week or $520 a year

$44,001- $48,000

$66,001-$70,000

The payment reduces by 13 cents for every dollar you earn.

Commence collecting ECE invoices

Parents and caregivers should begin collecting their Early Childhood Education (ECE) invoices from 1 July 2024. These invoices will be necessary for claiming the new Family Boost childcare payment later in the year. By keeping track of these invoices, you'll be prepared to register and make claims through Inland Revenue's MYIR portal starting in mid-September.

Beware of scammers during the 2024 tax season

Scammers are stepping up their efforts along with the rise in assessments. Taxpayers are warned to be particularly cautious and alert for frauds. Enable two-factor authentication to increase security and if you suspect a scam, please send it to This email address is being protected from spambots. You need JavaScript enabled to view it. to report scam.  For additional information, go to www.ird.govt.nz.

Backdated GST Registration

Based on recent clarifications from the IRD, the effective date for charging and remitting GST is determined by whether the registration was voluntary or liable. Specifically, if a person was required to register due to exceeding the GST threshold, evidence of this liability must be provided to backdate the GST registration. Conversely, if the registration was voluntary, the IRD will decline requests to backdate the GST registration.

Inland Revenue Focus on Crypto Assets

People who are assessing with crypto assets would need to comply with their tax obligation, as Inland revenue started focusing on the clients who are dealing with crypto assets and not declaring their income. Specifically, people can’t be hidden in blockchain when involving in these activities, and IRD have tools and analytics capabilities to identify and expose them. Moreover, Inland Revenue has signed up to the crypto asset reporting framework. In other words, they would receive information and data on clients’ crypto assets transaction outside of New Zealand.

Business Updates

Budget to Enhance Tax Compliance

Inland Revenue (IR) is utilizing $29 million from this year’s Budget to enhance compliance efforts targeting those who either struggle with or deliberately evade tax obligations. And the new funding will bolster resources for investigations and audits, especially focusing on sectors like the hidden economy, retail, and cryptocurrency. Key initiatives include increasing audits and debt collection, particularly for overseas-based student loan debtors and businesses in the construction sector. IR will also intensify efforts against tax non-compliance among multinationals and corporate restructures. Peter Mersi Commissioner of IRD encourages taxpayers with debt to engage with IR early to arrange manageable repayment plans and emphasizes the importance of voluntary disclosures to correct mistakes before they are detected.

Focus on Small Liquor Stores

Inland Revenue's initial phase of its hidden economy campaign revealed significant compliance issues among smaller liquor outlets, including unreported sales and employee tax evasion. Following 220 unannounced visits, Inland Revenue identified over 100 instances where PAYE deductions were not remitted, and nine businesses have been referred for audit. The campaign will continue with increased scrutiny to ensure fair practices and improve compliance in the sector over the coming year. 

Energy Industry in Crisis - Gas Shortage

New Zealand's energy industry is in crisis due to a severe gas shortage, forcing industrial users to reduce production by up to 70%. Further, domestic gas reserves are at record lows, and wholesale prices have climbed. The country’s gas production is expected to fall significantly short of demand and this shortage is worsened by dry weather affecting hydro lakes and the reduction of major gas fields. Gas cost is expected to rise in the near future until alternate solutions are found. 

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