There are several important tax changes taking effect this year, including:
Ring-fencing of residential property deductions
From 1 April 2019, investors will no longer be able to deduct rental losses from other income. Instead the losses will be carried forward and available to offset against future residential rental income.
Extension of the brightline test for residential land
The bright-line period for residential land has been extended from two years to five years for properties purchased on or after 29 March 2018.
The bright-line test doesn’t apply if the property was:
- your main home
- transferred as part of an inheritance
- transferred to you as an executor/ administrator of a deceased estate.
GST on imported goods
From 1 October 2019, GST will be applied to imported goods valued at or below $1,000 supplied to NZ resident consumers by requiring offshore suppliers to register and return GST on those supplies. Customs will continue to collect GST on imported consignments valued over $1,000. GST will not apply to supplies of low value goods made to NZ GST registered businesses.
Pay day filing replaces monthly schedules
From 1 April 2019, employers are required to file employment income within two working days each payday rather than the monthly employer schedules. If you use software, such as SmartPayroll or Thank You Payroll, they will file these on your behalf. If you file your own returns, you need to do this on a payday basis. We strongly recommend using a dedicated software solution. Give us a call if you need more information.
Non declaration tax rate
The non declaration tax rate for taxpayers who do not provide their IRD number to payers of interest income will be increased from 33% to 45%.
Kiwisaver changes
From 1 April 2019, new contribution rates of 6% and 10% are available in addition to the rates of 3%, 4% and 8%.
The ‘contribution holiday’ has been renamed as ‘savings suspension’ to remove the positive connotations of the word holiday! Until now a contributions holiday was available for five years, but this will reduce to one year. Members will be able to roll this holiday over however it will need to be a conscious decision each year.
Currently the maximum age to join Kiwisaver is 65, being the age of NZ Superannuation entitlement. This is important, as since the launch of KiwiSaver, other non KiwiSaver managed funds have dwindled to a handful of options. Since the launch of KiwiSaver, if someone joins KiwiSaver after the age of 60, their funds are locked in for 5 years. However, people now joining KiwiSaver from 1 July 2019 will not have a lock-in period. All new members will be able to withdraw their funds from their 65th birthday.