Recent Tax Changes
Here is a snapshot of the latest updates that may affect you or your business.
The cost of living support payment of $350 (payable in three monthly instalments starting 1 August) to support an estimated 2.1 million Kiwis who earned less than $70,000 last tax year was passed under urgency. This payment is to be administered by the Inland Revenue Department and to qualify for that payment a person must not be eligible for the Winter Energy Payment; must be 18 or over and a tax resident in NZ.
Changes in rates – Each year the Inland Revenue Department make changes as a result of CPI adjustments. The following increase in rates have been announced:
Standard-cost for household services for boarding providers has increased from $194/week to $207/week. This means that if you have a boarder that pays below the standard-cost then there is no requirement to return income; if the boarding income exceeds $207/week then you will need to declare that for tax purposes. However, expenses can offset that income by either actual household costs as a percentage or the flat standard-cost rate if you are unable to determine the actual cost.
Standard-cost for household services for short-stay accommodation providers has increased from $52/day to $55/day for guests staying at an owned property or from $47/day to $50/day for guests staying at rented properties. This means that if you make a property available to the public for short-stay accommodation you can either claim as a deduction for income tax purposes the actual household costs as a percentage and based on nights occupied or the flat standard-cost rate if you are unable to determine the actual cost.
Motor Vehicle mileage rates have increased. The tier 1 rate (for 14,000kms or less in a year) has increased from $0.79/km to $0.83/km; the tier 2 rates (for additional mileage over 14,000kms) has also increased for petrol or diesel vehicles from $0.27/km to $0.31/km; for petrol hybrid vehicles from $0.16/km to $0.18/km and then for electric vehicles it has increased from $0.09/km to $0.10/km.
Use of Money Interest rates have increased from 7.00% to 7.28% pa effective from 9 May 2022. That is the rate of interest that the Inland Revenue Department will charge on unpaid or late paid taxes. The credit interest rate on overpayments has remained unchanged at 0%pa.
Paid parental leave entitlements will increase on 1 July 2022 resulting in up to $40 extra a week , or an additional $1,040/year for those taking the full 26 weeks of parental leave. The minimum rate for self-employed persons will also increase to $212/week which is equal to 10 hours at the minimum wage rate for an adult worker.
