The highly anticipated first budget of the new Coalition Government, presented by Finance Minister Nicola Willis on 30 May 2024, introduced several tax changes typical of first-term governments.

You might be wondering, what does this mean for me? Below, we outline these changes and what benefits you may be entitled to.

Tax cuts for everyone! Well, almost...

Income tax brackets, unchanged for over a decade, will be adjusted by the Coalition Government starting 31 July 2024, ensuring every individual receives some form of tax cut. The new brackets are as follows:

The Government has also extended the $520 independent earner tax credit. Individuals who earn between $24,000 and $66,000 will now be entitled to this $520. Individuals earning between $66,000 and $70,000 will now receive this credit but at a lesser amount. Previously only those who earned between $24,000 and $44,000 were eligible for this credit with those earning between $44,000 and $48,000 receiving the reduced amount.

Trust Tax Rate

The previous Labour Government planned to raise the trust tax rate universally from 33% to 39%, but postponed this legislation until after the election. However, on 28 March 2024, the Coalition Government enacted a law increasing the trust tax rate to 39% for most trusts.

Starting from the 2025 income year, the trust tax rates are as follows:

• 33% for trusts with income up to $10,000 annually.
• 33% for estates in their creation year and the following three years; thereafter, the rate increases to 39%.
• 33% for 'Disabled Beneficiary Trusts'.
• 39% for any other trust with over $10,000 net income after expenses and beneficiary distributions.

New Early Childhood Education (ECE) rebates (FamilyBoost)

The Government has launched FamilyBoost, a new rebate program aiding eligible NZ families with licensed ECE payments for children under 5 years old not covered by existing subsidies.

Starting mid-September 2024, families earning under $180,000 annually can apply for a 25% rebate on ECE costs, capped at $150 per fortnight, for expenses incurred from 1 July 2024.

To claim FamilyBoost, you must register each child's IRD number in myIR. Starting 1 July 2024, keep copies of invoices from your ECE provider(s)—receipts alone won't suffice. Quarterly claims can be submitted from 1 October 2024 online, though we cannot file these for you. However, we're available to assist with any queries.

While this relief is crucial, the additional compliance is noted. Inland Revenue is collaborating with ECEs to simplify this process, potentially transferring administration to ECEs from next year.

While these changes will provide a substantial change for some, others will feel a minimal effect. To learn more about how these changes can benefit you, contact us today for personalised insights and guidance. For more information on the new Coalition Government's Budget 2024's treatment of property, read here