Tax Changes - 1 October 2010

signpost_taxTax changes

Personal income tax rates

The tax rates on personal income (eg salary, wages, ACC payments, or self-employed income) are changing from 1 October 2010.

The new tax rates effective from 1 October 2010 are:

Income Band Tax Rate
$0 - $14,000 10.5%
$14,001 - $48,000 17.5%
$48,001 - $70,000 30%
$70,000 and over 33%

Changes to the tax rates on savings and investments

The 2010 Budget introduced changes to the rates of RWT (resident withholding tax), which banks and other financial institutions (interest payers) are required to deduct from interest payments they make.

Resident Withholding Tax rate:

Income Range 1 April to 30 September 2010 1 October 2010 onwards
$14,000 or less 12.5% 10.5%
$14,001 - $48,000 21% 17.5%
$48,001 - $70,000 33% 30%
$70,001 and over 38% 33%
If IRD number not provided 38% 33%
Default rate new a/c opened

after 31 March 2010 38% 33%
Default rate in all other cases 21% 17.5%

Your bank or financial institution will apply the new rates for you automatically. You'll only need to change your tax rate if your income level has changed placing you in a higher or lower income band.

Make sure you're using the correct (PIR) prescribed investor rate

From 1 October 2010 there here are four rates: 0%, 10.5%, 17.5% and 28%. Read the information below to identify the correct rate for your circumstances. Only certain trustees are able to choose a rate. All other investors have only one rate that they qualify for.


Resident individuals

Taxable income was $14,000 or less

If, in either of the previous two income years your taxable income was $14,000 or less, and when combined with your PIE income or loss was...        and...     then your PIR is...

$48,000 or less in the income year
$48,001 to $70,000 in the income year

$70,001 or more in both of the previous two income years

you don't already qualify for 10.5%

10.5%
17.5%

28%

Taxable income was $14,001 to $48,000

If in either of the previous two income years, your taxable income plus your PIE income or loss was:

           $70,000 or less in the income year, your PIR is 17.5%, or

           $70,001 or more in both of the previous two income years, your PIR is 28%.

Taxable income was more than $48,000

If your taxable income was more than $48,000 in both of the previous two income years, your PIR is 28%.

Note:
If for the two previous income years you qualify for two rates, your PIR is the lower rate.
For example, last year your rate is 17.5%, the previous year's rate is 10.5%, so your PIR is 10.5%.


Other investors

If you are a... then your PIR is...

Non-resident investor

Company, incorporated society,
PIE or PIE investor proxy (PIP)

Trustee (excluding charitable
trusts) and Super funds
Note: only trustees of
testamentary trusts can
choose 10.5%

Registered charitable trust

Joint investment, partnership
or unincoporated society


 

28%

0%


either 28%, 17.5%, 10.5% or 1%. You can choose
one to best suit your beneficiaries




0%

0%, 10.5%, 17.5% or 28%

The investment should be split and each
Partner/holder should give the PIE their
correct PIR and IRD number


When you have calculated your PIR

Once you have calculated your PIR, you should give your PIE your PIR and your IRD number.

2010/11 tax year

The PIRs were changed for income years commencing on or after 1 April 2010 and again from 1 October 2010. The PIE will change an investors' rate as follows:

Rates for period 1 April 2010
to 30 September 2010
Rates from
1 October 2010
30% 28%
21% 17.5%
19.5% 17.5%
12.5% 10.5%
0% 0%
Default rate 30% 28%

 Note: the 19.5% rate only applies to those multi-rate PIEs with an early balance date.

 There was no change to the eligibility criteria or income levels so you will not need to review your rate unless your circumstances have changed.

 The above detail was extracted from the Inland Revenue web site www.ird.govt.nz

Changes to GST rate

 The GST rate is increasing from 12.5% to 15% for goods and services supplied on or after 1st October 2010.

Tax

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The information on this site is intended as a guide only. The information is of a general nature and does not and cannot ever constitute personal advice.
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