Tax Changes - 1 October 2010
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.
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
$70,001 or more in both of the previous two income years
you don't already qualify for 10.5%
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%.
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%.
|If you are a...||then your PIR is...|
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
1 October 2010
|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.
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