Government has announced changes as part of Budget 2012. The following will be implemented by Inland Revenue over the next few years:
Tax credit changes
Changes to three tax credits - the income under $9,880 tax credit, the tax credit for childcare and housekeeper expenditure, and the tax credit for the active income of children - have been announced as part of the Budget.
The changes will see the tax credit for the active income of children replaced with a limited tax exemption.
The income under $9,800 tax credit and the tax credit for childcare and housekeeper expenditure have been repealed. These changes will take effect from the 2012/2013 tax year. Customers will still be able to make claims for the 2011/2012 tax year and previous years.
Herd Scheme - elections to exit
As from the 18 August 2011 elections to exit the Herd Scheme can no longer be made except in narrow circumstances. This has been passed as part of Budget 2012 legislation. The supporting detail will be introduced later this year and go through a full Parliamentary process.
Mixed use assets
It is proposed that changes will be made to the rules around the deductibility of costs relating to assets, such as holiday homes, boats, and aircraft, that are both used by their owners and rented out for income, to take effect from the beginning of the 2013-14 income year.
The voluntary repayment bonus will be removed from 1 April 2013. Any extra repayments made in relation to student loan obligations for the 2012/2013 tax year (1 April 2012 – 31 March 2013) and earlier may still qualify for the bonus. Extra repayments made from 1 April 2013 in relation to obligations for the 2013/2014 tax year onwards will no longer qualify for the bonus. These additional repayments will still help borrowers pay off their student loans faster.
Other proposed changes to student loans have also been announced by Government and are subject to regulation, or legislation to be introduced later in 2012.
- The student loan repayment rate for all New Zealand-based borrowers earning over the repayment threshold will be increased to 12 cents in the dollar from 1 April 2013.
- The information match between Inland Revenue and the New Zealand Customs Service will be extended to identify student loan borrowers in serious default, so that we can immediately initiate contact with the borrower.
- The definition of income for student loan repayment purposes will be broadened to include a wider range of income types from 1 April 2014.
For more information about Budget 2012 go to the:
StudyLink website - for changes to student loans and allowances
Ministry of Education website - for changes to tertiary education and student support
Date published: 30 May 2012
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