Treasury have given some examples of overall change in net income for various persons or couples. You can see which one may be closest to you. In order they are:
- Foreign owned company has NZ subsidiary earning $8 million and interest expenses of $5.6m and net profit of $400k due to thin capitalization rules. Under new rules taxable net profit increased to $1.52m, so firm is $313K worse off.
- Professional landlord with 25 properties earning $112,000 and depreciation of $52,000. $15k a year worse off as now pays tax on $112,000 of income not $60K
- Business owner which makes $120,000 profit but pays salary of $48,000. Has spouse and two children. $8k a year worse off as no longer eligible for WFF.
- Couple each earning $150K owning 10 properties costing $4m and now worth $6.5m. No tax paid on rental income of around $35K a year due to depreciation. Overall $5,600 a year worse off.
- Unemployed person on dole pays $100/week rent and gets $36 accom supp. $53 better off.
- DPB beneficiary with three children paying $300/week rent, $130 better off.
- Student on student allowance and $100/week rent and $40/week accom supplement. Earns $9K part-time. $140 better off.
- 19 year old on minimum wage pays $100/week rent. $330 a week better off
- Retired couple own home, no mortgage or investments. $560 better off
- Single superannuitant in own home with $10K a year investment income. $620 better off.
- Sole earner earning $50K and $120/week rent. $830 better off.
- Couple with two children, earning $80K and $40K with one investment property which generates $2,700 profit and $3,000 depreciation. Property has doubled in value from $300K to $600K. $1,225 better off.
- Couple earning $50K and $26K with two kids and $300/week mortgage. $1,285 better off.
- Couple saving for first home both earning $60K, $1,000 a year interest, $250/week rent. $2,100 better off.
- Couple earning $100K and $40K with three children. $600 a week mortgage. $3,170 better off.
So of the 15 examples, four are worse off. The foreign owned company, the two professional landlords and the company owner who was claiming WFF despite their high income.
The student and the two beneficiaries are marginally better off by $1 to $3 a week. This reflects of course they are not generally (yet) contributing to the economy, but are a net cost on other taxpayers.
A 19 year old on the minimum wage is around $7 a week better off, and those on the pension around $10/week better off.
A sole earner on the average FT wage is $15/week better off.
And those who pay the most tax currently, are of course even better off. They get to keep more of their earnings.Tags: Budget, tax