2014 Budget Highlights

Raviolo-Chair-Magis-Ron-Arad-1The report is prepared by CCH in-house analysts with the assistance of specialist practitioners from EY and Bell Gully:

Cheque duty abolished
Cheque duty will be abolished from 1 July 2014.

Tax changes to research and development (R&D)
Two “new” tax measures that were signalled in last year’s Budget are explained in further detail in the 2014 Budget:

  • Loss-making start-up companies will be able to “cash out” up to $500,000 of their tax losses from R&D expenditure (ie instead of carrying forward the losses, they will receive a cash payment). This cap of $500,000 will eventually rise to a maximum of $2 million.
  •   Business will be allowed tax deductibility for R&D “black hole” expenditure that is currently neither deductible nor depreciable:
  1. Capitalised development expenditure that relates to a patent, patent application or plant variety rights, and which results in a depreciable tangible asset, will be depreciable for taxpayers carrying out R&D.
  2.  A one-off deduction will be available for capitalised development expenditure that does not result in a depreciable intangible asset.

These measures take effect from the 2015/16 income year.

Changes to parental tax credit and parental leave

  •   From 1 April 2015, the Government will increase the parental tax credit from $150 a week to $220 a week, and the payment period will be extended from eight weeks to 10 weeks. This increases the total credit from $1,200 to $2,200.
  •   The abatement rules will also be changed to better target the parental tax credit towards low- to middle-income families.
  •   Paid parental leave will be extended from 14 weeks to 16 weeks on 1 April 2015 and to 18 weeks on 1 April 2016.
  • Eligibility for paid parental leave is extended to “home for life” caregivers and to people in less regular jobs, including seasonal and casual workers.

ACC levy reductions signalled
No definitive decision has been made as to the exact rate of reduction, but the Minister of Finance has signalled that the average ACC levy for a private motor vehicle could fall by $130 a year from 1 July 2015.

Inland Revenue $48 million boost for tax compliance
Inland Revenue is given an additional $48 million in funding to bolster its tax compliance activities.

Duty-free tobacco allowances cut

  •  From 1 November 2014, the duty-free limit for passengers arriving in New Zealand will be cut from 200 cigarettes to 50 (or from 250 grams of tobacco to 50 grams).
  •  Tobacco products sent as a gift from abroad that were previously eligible for the $110 duty-free gift allowance are now subject to excise duty and GST.