The NZ budget what does it mean for you
Filed under: Cost of living, Economics, General Budgeting, Property & General Investing
Well honestly – pretty good things for anyone thinking of emigrating. Because no matter what else changed income tax rates went down which means you get to keep more of the money you worked your butt off to earn. And whether people agree or not- I personally believe that that should be the case.
So lets the good bit out the way now – what are the new Income Tax Rates:
Now that has to be good news for earners.
As for us personally – well using the calculators shows that if we were just earning the same 152k that hubby earned we would be doing quite well out of the new rates.
On current rates – Hubby earns $12,666 a month before tax and loses $4093 in tax. On the new rates he loses $3423 in tax, leaving us a respectable $670 a month better off.
There are some downsides. For one GST is going up in October from 12.5% to 15%. But while that’s not brilliant news for a lot of people for many people this is a tax that you have some control over paying. If you don’t spend you don’t pay it. So for the people who want a less consumerist lifestyle when they come to NZ, and are prepared to send less than they earn this works out really well.
There’s a bit if a hit for us property investors in that we can no longer claim depreciation on the building we are renting out. So this will reduce our tax losses and therefore our tax refund. However this is likely to be outweighed by the fact that we will have less tax screwed out of us in the first place.
I still firmly believe that we would have to pay a huge amount less in tax if governments in general would stop spending like there’s no tomorrow because they see us as a constant source of ready funds.
All in all though- this budget basically seems to me to be a really good thing for almost everyone. I have always believed that NZ was a great place to come if you wanted to get ahead financially. Most kiwis look askance at such a suggestion because they think the taxes are astronomically high here. I guess when you come from the UK 40% plus 11% NI plus the gob smacking plethora of hidden taxes- it seems like a breeze here. But then kiwis think 6% mortgages are cheap!
Perception really does depend on where you are looking from.
Your downside is still going to be the pathetically low wages, but I’ve discussed several times that you can do something about that.
It’s more complicated for us because of our rentals, but that requires a sit down with some coloured pens, a calculator, our last few years accounts and lots of coffee. Basically – we are saving a whopping $8,036 a year in tax on the new rates. But right at this moment I don’t actually know how much extra we will have to find to keep hold of the rentals with depreciation on the building gone. I don’t think its going to be as much as we are saving but I’ll let you know what I find.
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Related posts:
- Tax Changes – boring but important.
- It’s a budget day today.
- Some useful new Tax Calculators and graphs
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