The Treasury

Global Navigation

Personal tools

Government
Publication

Budget 2009 Home Page Key Facts for Taxpayers

Key Facts for Taxpayers (Part 1)

Who pays income tax... and how much?

Who pays income tax... and how much?
  Number of people Tax paid  
Annual individual taxable income ($) 0 %   ($m) %  
Zero 241 7 0 0
1 - 10,000 448 14 257 1
10,000 - 20,000 819 25 1,675 7
20,000 - 30,000 407 12 1,624 7
30,000 - 40,000 375 11 2,290 10
40,000 - 50,000 316 10 2,612 11
50,000 - 60,000 236 7 2,601 11
60,000 - 70,000 167 5 2,451 11
70,000 - 80,000 83 3 1,468 6
80,000 - 90,000 67 2 1,447 6
90,000 - 100,000 40 1 1,008 4
100,000 - 150,000 72 2 2,482 11
150,000+ 46 1 3,415 15
All 3,317 100 23,330 100

This table includes tax on New Zealand Superannuation and major Social Welfare benefits, but excludes ACC levies, Working for Families tax credits, independent earner tax credits and anyone who is under 15. Data are projected for the year ended March 2010 and include the changes to tax rates and thresholds on 1 April 2009.

Tax scale from 1 April 2009

12.5c per $1 on income up to $14,000
21c per $1 on income between $14,001 and $48,000
33c per $1 on income between $48,001 and $70,000
38c per $1 on income over $70,000

Independent earner tax credit (IETC) from 1 April 2009

$10 per week on income between $24,000 and $44,000
Annual entitlement abated at 13c per $1 over $44,000
$0 per week on income of $48,000 and over

To be eligible for the IETC an individual must not receive Working for Families tax credits, New Zealand Superannuation or a benefit.

Personal income tax examples

Example 1: Single earner
Annual gross income from salary or wage   $42,000
Annual tax liability $7,630  
Annual Independent earner tax credit $520  
Net tax paid   $7,110
Annual net income   $34,890

The tax payer presented in Example 1 is not in receipt of any additional core government benefits, Working for Families tax credits or New Zealand Superannuation payments. The annual value of the independent earner tax credit presented in Example 1 was determined by rates and thresholds applicable from 1 April 2009.

Example 2: Single income couple with three children under 13
Annual gross income from salary or wage   $50,000
Annual tax liability $9,550
Working for Families tax credits $11,210
Net tax credit   $1,660
Annual net income   $51,660

 

Example 3: Combined income couple with three children under 13
Annual gross income from salary or wage   $80,000
Annual tax liability $14,660
Working for Families tax credits $5,210
Net tax credit   $9,450
Annual net income   $70,550

The Working for Families tax credit presented in Examples 2 and 3 are in two parts, Family Tax Credit (FTC) and In-Work Tax Credit (IWTC). An income split of $50,000 and $30,000 between both caregivers has been assumed in Example 3. Entitlement and value of the Working for Families tax credit depends on: the amount and type of income a family receives; the number and age of children within a family; and the weekly number of hours worked by caregivers. It is assumed that the residence tests for the tax credits and the number of hours worked for the in-work tax credit have been met. For more information please visit: www.workingforfamilies.govt.nz

How do tax scale changes affect tax revenue?

By increasing thresholds by $1,000:
By increasing thresholds by $1,000: ($m)
Bottom threshold from $14,000 to $15,000 160
Middle threshold from $48,000 to $49,000 75
Top threshold from $70,000 to $71,000 12

 

390390
By decreasing tax rates by 1%:
By decreasing tax rates by 1%: ($m)
Top individual rate from 38% to 37% 101
Upper middle rate from 33% to 32% 92
Lower middle rate from 21% to 20%
Bottom rate from 12.5% to 11.5% 331
Company tax rate from 30% to 29% 180
GST rate from 12.5% to 11.5% 770

Estimated decrease in tax revenue for the year ended March 2010 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.

How does a 1% change in growth affect tax

How does a 1% change in growth affect tax
Tax source ($m)
Wages and salaries 270
Taxable business profits 110
Spending by households 120

Estimated effect on a full year's revenue of a one-percentage point change in the growth or income or spending source in 2009/10.

What is the full-year cost of... ?

What is the full-year cost of... ?
  ($m)
$1 a week increase (in the hand) to NZ Super 28
$1 a week increase (in the hand) to other benefits 18
$1 billion increase in government debt 47

Further Budget 2009 information is available on:

http://www.treasury.govt.nz/budget/2009

Ready reckoner for tax rate and base changes:

http://www.treasury.govt.nz/government/revenue/estimatesrevenueeffects

Page top