Government has unveiled yesterday their NO FRILLS BUDGET in which it tried to strike a balance between supporting New Zealanders with the cost-of-living crisis, delivering core public services, improving the resilience of the country’s critical infrastructure and economy.
As Labour Governments go there was absolutely nothing in the budget for the average hard-working kiwi, small businesses that are the back bone of our economy and the farming sector.
Some welcome policies in the budget that focus on assisting with the cost of living are summarised below:
Childcare: making the 20 hours free early childhood education to 2-year-olds.
Health Costs: removing the $ 5 prescription fee, which will be a welcome proposal for the independent pharmacies in rural and regional communities
Public Transport: introduction of free public transport to under 13-year-olds and half price for the under 25-year-olds.
Power bills: providing further funding for insulation and heating.
TAX: Increase of the Trustee Tax Rate to 39%
Trustee tax rate will be aligned to 39% being the top marginal tax rate effective 01 April 2024. Historically the Company, trustee and individual top marginal tax rate were aligned at 33%. At the time the top marginal tax rate for individuals was increased to 39% the government has signalled that it will review the Trustee rate in the future. It is therefore no surprise that this has been announced.
As a result of this announcement, companies that have Trusts as shareholders may wish to consider paying out their available retained earnings as dividends no later than 31 March 2024 to enjoy the benefit of lower overall tax rate of 33%. Any dividends paid by a company to a Trust shareholder on 01 April 2024 or later will be subject to tax at 39% if retained at Trust Level.
Other Areas of Focus of the Budget include:
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