WELLINGTON: New Zealand’s Finance Minister, Bill English, outlined a number of tax measures contained in the 2015 Budget during his presentation speech on May 21, 2015. The Budget targets a deficit of NZD684m (USD500m) for 2014/15 and a surplus of NZD176m in 2015/16.
The surplus is expected to grow to NZD3.6bn in 2018/19. The measures contained in the Budget include NZD500m worth of cuts to Accident Compensation Corporation (ACC) levies in 2016 and 2017.
The Government is also taking extra steps to bolster and enforce the tax rules on property. The changes include a requirement that non-residents have a New Zealand bank account and Inland Revenue Department (IRD) number in order to buy and sell property. Subject to consultation, these changes will enter into force on October 1 this year.
The Government also aims to introduce a withholding tax for non-residents selling residential property around the middle of 2016. English said that modest reductions will be made to income taxes from 2017 should fiscal and economic conditions allow. He also said that the Government will impose a new levy on travellers to fund passenger-related biosecurity and customs activities at the border.
Currently, the cost of these activities which protect New Zealand from imported pests, diseases, illegal drugs, and other threats are met by taxpayers. The new Border Clearance Levy is expected to take effect from January 1, 2016, and, subject to consultation, will be around NZD16 for arriving passengers and around NZD6 for departing passengers.
It will raise around NZD100m a year. The Budget also provides Inland Revenue with a further NZD74m for additional enforcement efforts, including NZD29m allocated specifically for property tax compliance.
The Finance Minister said that tax revenue is expected to be NZD4.5bn lower over this year and the next three years compared with what was forecast in last year’s Budget as nominal gross domestic product (GDP) is not rising as quickly as previously expected.
