By Saurav Wadhwa on Friday, 31 May 2024
Category: Business growth

IBBZ Accounting Business and Tax Updates May 2024

Business and Tax Updates May 2024: IBBZ Accounting

Summary:

Given recent political shifts in New Zealand, we've witnessed a flurry of policy changes, particularly in taxation. In this edition, we'll highlight the significant updates in tax policy 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. Without further delay, let's explore the key insights of this month's newsletter.

Tax Updates 

Amendments to the Bright Line Rule

The Brightline rule would be implemented according to the following criteria from 1 July 2024.

Rollover Relief Rules for Associated Persons

Associated Persons can benefit from the Rollover Relief Rules. The related person standards for rollover relief have been extended to include rollover relief. To be considered for rollover relief, the transferor and transferee must have been associated for a minimum of two years prior to the transfer. 

Removal of Building Depreciation

Recent amendments removed the depreciation for building with a useful life of 50 years or more. A new transitional provision for commercial fit-out has been made available for buildings owners who previously made use of a transitional provision introduced when building depreciation was last set to 0%. These building owners were previously provided with the ability to separate an amount representing the cost of commercial fit-out from the building’s adjusted tax value, under former section DB 65, so the fit-out could continue to be depreciated. New section DB 65 allows these owners to continue to do this. The main change from former provision is that depreciation deductions for fit-out will be calculated using a straight-line rate of 1.5% (rather than the 2% rate used in the former provision).

Interest Deductibility

Interest Deductions on residential investment properties phased back in, beginning with 50% deductions for the fiscal year 2024. Increasing to 80% from April 2024 to March 2025, and would be allowing full deductions beginning April 2025.

An increase in the Family Tax Credit (FTC) and the Best Start Tax Credit (BTSC)

The FTC and BTSC have been raised to reflect inflation from 1 April 2024, onwards (MF 7, ITA 2007). Based on the changes, there is increase of $403 for the first kid and a $328 increase for each subsequent child. Also, the Best Start Tax Credit has increased by 206 dollars.

Adjustment in Trustee Tax Rate

The trustee tax rate has been raised from 33% to 39% for the 2024-25 and subsequent years. This adjustment was made to align the tax rate increase for personal tax which increased to 39% on 2020.Trusts with trustee income under $10,000 will still be taxed at 33%. Amendments clarify that beneficiary income subject to the minor beneficiary rule is also taxed at 39%.

Individual Income Tax Assessment for the year end 2024

New Zealanders can expect automatic income tax assessments from late May to July, while tax agents' clients will receive a 'more information request' letter to review and finalize their details. It's crucial for taxpayers to ensure accuracy, confirm promptly for potential refunds, and meet deadlines to avoid penalties or interest charges.

Business Updates 

The Government is updating insurance law with the Contracts of Insurance Bill.

The goal is to simplify the system and shift disclosure duties to insurers while ensuring quick compensation for policyholders after disasters. In simpler terms this is being done to protect consumers, with a focus on balancing customer protection and market certainty while keeping insurance premiums low. 

Government Announces Financial Services Reforms:

Reforms simplifying financial services, revoking complex affordability regulations, and improving access to home loans, aiming to protect consumers and stimulate economic growth. 

The Residential Tenancies Amendment Bill on its first reading, landlords will find it simpler to terminate periodic and fixed-term leases.

Pet owners will also benefit from the introduction of pet bonds, which will increase the supply of rental properties and streamline the process for pet owners renting homes.

The government repealed the Business Payment Practices Act 2023.

In the meantime, rather than relying on legislation, they are concentrating on alternative strategies to ensure that businesses receive payment more quickly, such as increasing the use of e-Invoices and compelling government agencies to pay faster. Additionally, companies are no longer required to disclose their payment terms to the public.

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