The year continues to present challenges for many businesses. The cost of living is high, and many are feeling the pinch of this.
We can hope the rest of the year brings more positive activity for everyone.
We thought we’d send an update with some recent tax changes.
Depreciation on Commercial Properties:
A commercial property comprises of land, buildings and building fit out. Over the years we have seen changes to the depreciation rules on each of these parts and more specifically, depreciation on buildings seems to bounce in and out of the depreciation regime.
From 1 April 2024 (for standard balance date taxpayers), taxable depreciation deductions on commercial buildings will no longer be claimable.
Technically buildings will still be considered “depreciable property”, but the annual depreciation rate will be set at 0% meaning no taxable deduction will be available.
However, you must be aware the property remains subject to the depreciation rules, such as depreciation recovery income if it is sold for more than tax book value.
The change affects all commercial buildings with an estimated useful life of 50 years or more. Building fit out within a commercial building can be depreciated separately to the building itself.
We encourage you to maintain detailed allocations of the fit out when during initial development or acquisition of a property.
Personal tax rates:
The government has advised that the thresholds are increasing for personal tax rates from 1 July 2024 which will provide some small cashflow relief.
Current Threshold | New threshold 31 July 2024 | Tax rate |
$0 - $14,000 | $0 - $15,600 | 10.5% |
$14,001 - $48,000 | $15,601 - $53,500 | 17.5% |
$48,001 - $70,000 | $53,501 - $78,100 | 30% |
$70,001 - $180,000 | $78,101 - $180,000 | 33% |
$180,001 upwards | $180,001 upwards, no change | 39% |
Mileage rates:The IRD business vehicle Tier 1 mileage rate for the first 14,000 kms travelled annually has increased to $1.04 per km for the 2023/2024 year.
For the Tier One Rate, this is an increase from $0.95 per km in the prior year. Tax payments:Some upcoming dates to note:
21st June 2024 – Final date to tax purchase via Tax Management New Zealand for 2023 terminal taxes.
28th August 2024 – First 2025 provisional tax instalment for provisional tax paying individuals and trading entities with a March balance date.
Xero plan and price changes:
Xero has advised a plan and price change coming up from 12 September 2024 which we will email to affected customers to look at their options.
Trust tax rate changes:
Following on from our last newsletter, as you know the trustee tax rate in trusts has increased from 33% to 39% effective 1st April 2024.
The 39% tax rate applies to amounts retained as trustee income and not allocated to individual beneficiaries.
Where income is allocated to beneficiaries, their individual tax rates apply.
Most trusts have the ability to allocate income to beneficiaries. However, where the beneficiaries’ individual income exceeds $180,000 their income is taxed at 39%.
Please get in touch if you are receiving significant dividends in your trust in the 2025 tax year, and your personal income exceeds $180,000, as there might be a need to consider paying 2025 provisional taxes.
Please get in touch if there is anything we can assist with.
Michael, Anna, and the team Michael.Paton@naca.co.nz 021595811 Anna.Paton@naca.co.nz - 021595112 www.nightingalepaton.co.nz
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