New legislation - 2006: Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 [2006 No 3]

Increase in the child tax rebate

Section KC 2 of the Income Tax Act 2004

The maximum child rebate payable has increased from $156 to $351 a year.

Background

The child rebate was introduced so children are not required to pay tax on small amounts of income. As the child rebate has not been increased since 1983, its real value has eroded over time.

Consequently, an increasing number of children are earning income which exceeds the current rebate threshold. This is problematic as some child taxpayers incur compliance costs in relation to small amounts of income earned, while others fail to meet their tax obligations. When children do comply, administrative costs associated with collecting and processing small amounts of tax can exceed the revenue collected.

Key features

Section KC 2 of the Income Tax Act 2004 increases the child rebate to $351 a year and allows an eligible child to earn income (less interest and dividends) up to $2,340 per annum, tax-free.

Some eligible children will no longer be required to deduct tax or meet other tax obligations for the income they earn. All eligible children whose annual income exceeds $1,040 (less interest and dividends) will benefit from the increase.

Children who are under the age of 15, or under the age of 18 and attending primary or secondary school, or who turned 18 in the preceding income year and are still at school, are eligible to receive the rebate.

Application date

The amendment applies for income years corresponding to the 2006-07 and subsequent tax years.

Other pages in: Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 [2006 No 3]

• Temporary exemption from tax on foreign income for new migrants and certain returning New Zealanders
• Clarification of treaty override power
• Rewrite amendments
• Reimbursement for the use of a private motor vehicle
• Organisation approved for charitable donee status
• Resident withholding tax on dividends paid by non-resident companies
• Amendments to disputes rules
• Miscellaneous technical amendments
• GST on goods outside New Zealand at the time of supply
• GST and distributions from a trust made for no consideration between associated registered persons
• GST and international postage stamps
• GST and credit contracts legislation
• Bloodstock write-down rates
• Duty on racing
• GST on goods and services supplied to security holders
• Trans-Tasman imputation credit-streaming
• Regrassing and fertilising expenditure
• The addition of Spain to the grey list
• Unacceptable tax position
• Reverse takeovers and continuity rules
• Income tax exemption for gaming machine income of gaming trusts
• Tax consequences of natural disasters
• Taxation of foreign hybrids and foreign tax credit rules
• Exemption for rights to benefit from employment-related foreign superannuation schemes
• New disclosure and recordkeeping rules for foreign trusts
• Treatment of distributions from cooperatives
• ACC attendant care payments
• Venture capital investment alongside the Venture Investment Fund
• Corporate migration
• Allocation of research and development tax deductions
• Taxation of share-lending transactions
• Fringe benefit tax
• Depreciation rates
• Aligning provisional tax payments with GST
• PAYE subsidy for small businesses

Date published: 22 Jun 2006

Back to top