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Budget 2017 Home Page Budget Economic and Fiscal Update 2017

Tax Policy Changes

This section details the material changes to forecast tax revenue since the Half-YearEconomic and Fiscal Update (Half-Year Update) as a result of revenue and spending initiatives. Table 10 shows a breakdown of the changes and the supplementary text describes each initiative.

Table 10 - Tax forecasting effects of Budget Update initiatives
Year ending 30 June
$ millions
2017
Forecast
2018
Forecast
2019
Forecast
2020
Forecast
2021
Forecast
Total
5 years
Family Incomes Package .. (486) (1,896) (1,895) (1,976) (6,253)
Base Erosion and Profit Shifting (BEPS) .. .. 50 100 100 250
Employee share purchase plans .. .. .. 2 11 13
Total .. (486) (1,846) (1,793) (1,865) (5,990)

Source: The Treasury

Budget Update Initiatives

Family Incomes Package

Table 10 shows the direct effect of the tax components of the Family Incomes Package. This includes the effects of tax threshold increases and the abolition of the Independent Earner Tax Credit (IETC), but excludes any consequent macroeconomic effects, eg, additional GST generated by additional household spending in response to the package.

Base Erosion and Profit Shifting (BEPS)

A number of measures relating to the taxation of multi-national companies operating in New Zealand. There may be additional tax forecast adjustments as the details of the BEPS reforms are developed.

Employee share purchase plans

A recently-introduced bill contains amendments to the rules relating to employee share purchase plans, to improve the law to ensure that, for both employees and employers, all labour income, whether paid in cash, shares or other fringe benefits, is taxed the same.

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