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Budget 2008 Home Page Key Facts for Taxpayers

What is the new personal income tax scale?

The new personal income tax scale
Tax rates and thresholds
Current
15% 21% 33% 39%
up to $9,500 $38,000 $60,000 above $60,000
New 12.5% 21% 33% 39%
from 1 October 2008 $14,000 $40,000 $70,000 above $70,000
from 1 April 2010 $17,500 $40,000 $75,000 above $75,000
from 1 April 2011 $20,000 $42,500 $80,000 above $80,000

For example from 1 April 2011, an individual earning $40,000 pa pays 12.5% tax on the first $20,000 of income and 21% tax on the remaining $20,000.

Who pays income tax and how much?
Annual individual taxable income ($) Number of people Tax paid
(000) % ($m) %
Zero 239 7 0 0
1 - 10,000 442 14 248 1
10,000 - 20,000 841 26 1,968 8
20,000 - 30,000 372 11 1,592 6
30,000 - 40,000 339 10 2,191 8
40,000 - 50,000 314 10 2,895 11
50,000 - 60,000 225 7 2,814 11
60,000 - 70,000 146 4 2,338 9
70,000 - 80,000 112 3 2,204 8
80,000 - 90,000 58 2 1,372 5
90,000 - 100,000 35 1 965 4
100,000 - 150,000 87 3 3,217 12
150,000+ 51 2 4,569 17
All 3,261 100 26,373 100

This table includes tax on New Zealand Superannuation and major Social Welfare benefits, but excludes ACC levies and anyone who is under 15.
Data are projected for the year ended March 2009 and include the changes to tax rates and thresholds on 1 October 2008.

By how much will my after-tax income increase?
Current annual taxable income ($) Weekly after-tax income increase above current ($) Annual
increase ($)
1 April 2011
from 1 Oct 2008 from 1 April 2010 from 1 April 2011
20,000
12 18 22 1,130
30,000
12 18 22 1,130
40,000
16 22 26 1,370
50,000
16 22 32 1,670
60,000
16 22 32 1,670
70,000
28 34 44 2,270
80,000 and above
28 39 55 2,870

The after-tax incomes calculated in this table exclude the ACC levy.

Working for Families Tax Credits increase from 1 October 2008 (dollars per week)
Annual family taxable income ($)
Number of children under 13
One Two Three Four
... ... ... ... ...
30,000 4 7 10 13
40,000 11 14 17 20
50,000 11 14 17 20
60,000 11 14 17 20
70,000 11 14 17 20
80,000 0 14 17 20
90,000 0 2 17 20
100,000 0 0 17 20
110,000 0 0 0 20
120,000 0 0 0 20
Cut-off points 74,862 90,457 106,052 125,547

Working for Families Tax Credits are in two parts, Family Tax Credit (FTC) and In-Work Tax Credit (IWTC). This assumes family income type is salary and wage, the family works the required hours to receive IWTC, and all children are under 13. Children over 13 may result in higher credits. The entitlements are weekly, rounded to the nearest dollar. Includes estimated benefits and other non-wage income for year ended March 2009.

How do tax scale changes affect tax revenue?
By increasing thresholds by $1,000:
($m)
  • Bottom threshold from $9,500 to $10,500
45
  • Middle threshold from $38,000 to $39,000
130
  • Top threshold from $60,000 to $61,000
25
By decreasing tax rates by 1%:
($m)
  • Top individual rate from 39% to 38%
165
  • Upper middle rate from 33% to 32%
140
  • Lower middle rate from 21% to 20%
405
  • Bottom rate from 15% to 14%
225
  • Company tax rate from 30% to 29%
225
  • GST rate from 12.5% to 11.5%
820

Estimated decrease in tax revenue for the year ended March 2009 for tax thresholds and rates as they stand at Budget day. This allows for interaction between tax types, but makes no allowance for feedback effects from the economy.

What is the full-year cost of New Zealand Super, other benefits and Government Debt
What is the full-year cost of ?
($m)
$1 a week increase (in the hand) to NZ Super 27
$1 a week increase (in the hand) to other benefits 14
$1 billion increase in government debt 67

Average incomes
Average individual wage earnings: ($)
Full-time earner 47,637

Full-time earner works for more than 30 hours per week.

Average family gross income
Average family gross income: ($)
Couple with children 96,322
Couple with no children 77,268
Sole parent 32,403
Single person 29,632

Includes estimated benefits and other non-wage income for year ended March 2009.

Further Budget 2008 information is available on:

http://www.treasury.govt.nz/budget/2008

 

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