Just in case your Santa stocking was looking a little empty, the recent release of the Taxation (Income Tax Rate and Other Amendments) Bill (2-1) is just the thing for you to print out, fill the gap in your sack, and provide you with some enthralling reading post the usual overeating that occurs every December 25th, regardless of how many times before you’ve told yourself you’ll never do it again.
So settling down for your much deserved afternoon nap post an industrial morning of helping the kids put together their new lego sets that Santa has kindly delivered, you can drift off reading that in 2021:
- A new top personal tax rate of 39% will apply to incomes in excess of $180k from the commencement of the 2021-22 and later income years, which for the majority of us will be April 1st. A number of tax rules will be amended to accommodate the new rate, including those related to PAYE, FBT, RWT on interest, ESCT, RLWT, RSCT, and the taxable Māori authority distributions non-declaration rate, although note that the RWT rate changes will not come into effect until 1st October 2021 to ensure that interest payers are able to implement the required systems changes
- To mitigate the game-players amongst us who may attempt to use trust structures to save 6%, increased information disclosures will be required for trustees’ annual returns for the 2021-22 and later income years. Trustees would be required to provide financial statements (primarily a P&L and balance sheet), details of distributions and identifying information for those receiving beneficiaries, details of settlements during the year and identifying information regarding the settlor, and details of other relevant persons, particularly those who have a power to appoint or dismiss a trustee, to add or remove a beneficiary, or to amend the trust deed
- IR’s information gathering powers will be clarified to make it clear that you can be required to provide any information IR considers that it needs solely for the purpose of tax policy development
- The minimum family tax credit (MFTC) threshold for 2020-21 would increase to $29,432 per annum ($566 per week) from $27,768 per annum ($534 per week). The purpose of the MFTC is to ensure that the incomes of families who work full-time (defined as 20 hours for sole parents and 30 hours for couples) and do not receive a benefit are always higher than what their income would be if they continued to receive a benefit.
The commentary to the Bill is only 11 pages, so you may need to couple it with the OECD’s philanthropic report to get you really snoring.