By Saurav Wadhwa on Sunday, 30 June 2024
Category: Business growth

IBBZ Accounting Business and Tax Updates June 2024

Business and Tax Updates June 2024: IBBZ Accounting

Summary:

Since Budget 2024 has been released last month, Budget 2024 has implemented some critical tax changes. In this edition, we'll highlight the significant updates about the Budget 2024 implications on tax treatment and some business updates. 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.

Brief Overview of Budget 2024

Budget 2024 is a balanced financial strategy that reduces debt while investing in vital services and offering targeted tax relief. It provides 1.9 million people with tax breaks, launches Family Boost childcare subsidies, and reallocates funds to frontline services out of a $3.2 billion operating budget. The following are major investments: $2.9 billion for law enforcement, $2.93 billion for education, $8.15 billion for health, and $4.1 billion for infrastructure. The budget also addresses the economic slowdown by predicting a recovery in 2024 and seeking to return to a budget surplus by 2027/28 while preserving financial discipline and reducing the amount of debt held by the government.

Tax Updates


The New Zealand Government is implementing tax relief measures in Budget 2024 to help hard-working New Zealanders keep more of their earnings. 83% of New Zealanders will benefit from tax relief to ease the cost of living. The changes include increasing personal income tax thresholds, expanding eligibility for the independent earner tax credit, increasing the in-work tax credit, and introducing Family Boost. Let’s review the breakdowns of updates.

Changes to Income Tax Thresholds


The New Zealand Government will raise income tax thresholds from July 31, 2024, to lessen the tax burden for individuals earning more than $14,000 per year, the first significant adjustment since 2010. This change attempts to reduce the growing tax burden on higher salary earners, allowing hardworking New Zealanders to retain more of their earnings. Below are the updated tax thresholds.

Current Brackets $ New Brackets $ 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%

Expansion of Independent Earner Tax Credit


The Independent Earner Tax Credit (IETC) will be available to those making between $24,000 and $70,000 annually as of July 31, 2024. The IETC's upper eligibility level, which now offers up to $20 per fortnight, is being raised from $48,000 to $70,000 annually to allow for income increases. The full credit will be awarded to individuals making between $24,000 and $66,000 annually; as income rises, entitlements will progressively decline. The IETC will assist 725,000 persons after these adjustments.

Introducing Family Boost

A new childcare payment called Family Boost is offered to low-to-middle-income families with children under the age of five. Its purpose is to assist with the expenses of Early childhood Education (ECE). Part of the cost of ECE can be reimbursed to parents and carers from July 1, 2024, up to a maximum of $150 per two weeks. The first payment will be made in October, and subsequent instalments will be delivered quarterly in a lump sum.

The highest amount that parents and carers can receive back for their early childhood education (ECE) expenses is $150, after considering the 20-hour ECE and the MSD Childcare Subsidy. Families earning more than $180,000 a year are ineligible for Family Boost, and the maximum payout decreases progressively for wages above $140,000.

Amendments to Paid Parental Leave

Paid parental leave benefits for qualified workers and independent contractors will increase from $712.17 to $754.87 per week before taxes on July 1, 2024. In addition, the minimum wage for self-employed contractors will increase from $227.00 to $231.50 per week, or 10 hours of labour per week. 

Budget 2024 Tax calculator

The Budget 2024 Tax Calculator is a tool provided by the New Zealand government to help individuals and families estimate how they may benefit from the tax changes introduced in Budget 2024. You enter specific details, and you will receive a summary of how much you or your family could be better off under the new tax measures, typically displayed in terms of fortnightly or annual gains.

Change in IRD Number Application Verification

Starting July 1, 2024, NZ Post will no longer check IDs for people applying for an IRD number. The AA (New Zealand Automobile Association) will keep providing this service. The front desk staff at IR offices will still be able to verify IRD numbers. 

2024 Home Office Square Metre Rate Update

Square metre rate for home office calculations for 2024 is set at $53.10 for the income year from 1 April 2023 to 31 March 2024


Business Updates

Important Update on Holidays Act 2003

In September 2024, the Ministry of Business, Innovation, and Employment (MBIE) will make available a draft of a bill that aims to amend the Holidays Act. Significant progress has been reported by Minister Brooke van Velden, whose exposure draft of a reform bill is scheduled for release in September 2024. Prior to the Bill's introduction in Parliament, interested parties in payroll, business systems, and the Act's effects on businesses and employees are encouraged to take part in focused consultations aimed at improving the text. The goal of this change is to increase entitlement compliance and clarity, which will benefit both employers and workers. Watch this space for additional developments.

Use Holidays Act Review to express your interest.
Reforming the Holidays Act: Register your interest in participating in targeted consultation on an exposure draft Bill Survey

Survey on Simplifying Granny Flat Construction Regulations

The Government is inviting feedback on a proposal to permit the construction of self-contained granny flats up to 60m² on properties with existing homes, exempt from building or resource consent. This initiative aims to reduce costs by up to $6,500 per build and requires designs to be simple and low-risk, meeting New Zealand Building Code standards. Qualified professionals must oversee construction to ensure safety, health, and durability. The consultation, open until August 12, 2024, seeks input from builders, mortgage lenders, prospective builders, and those interested in living in granny flats. For more details and to provide feedback, visit the MBIE 'Have Your Say' page.

Prioritizing Product Safety: A Guide for Small Business Owners

As small business owner, Prioritizing product safety is essential to protect your customer, business, and reputation. adhering to voluntary and mandatory safety standards, including materials, construction, testing, labelling, and instructions, ensures compliance and consumer safety.

New Zealand has started a full consultation on its health and safety at work regulatory system to find out what people think about how well it works and what could be done to make it better. The review talks about things like laws, rules, guidelines, and the roles of workers, companies, and regulators. People who have an interest are urged to give feedback before the consultation ends on October 31, 2024.

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