How the Budget affects your income
Thursday 24 May 2012 7:09 p.m.
By Patrick Gower
The Government has shown it's willing to take in every last cent it can to balance the books and it's going to hit tens of thousands of us in the pocket.
Parents who spend money on childcare are all entitled to a small tax credit.
You might spend thousands a year but you can claim up to $300 back.
But no more - Bill English says the credit unfairly benefits high earners.
“There won't be a lot of people missing out - but there will be some.”
Well, there are actually 172,000 people on the tax credits cut today according to the IRD.
But English says the housekeeper and childcare credit - which includes the disabled who need home-help - is an outdated 1930s policy.
“It’s really an anomaly now, its a maximum of $300 a year and it’s mostly claimed by higher income families hiring nannies.”
A total of 68,000 children who do paid work will lose their tax refunds - although there will be some new exemptions.
And 49,000 people who earn less than $10,000 will lose about an annual credit of $168.
Green Party co-leader Russel Norman is not pleased.
“It’s a very petty budget.”
So, the Government will remove:
- the Childcare & other tax credits - saving $117 million
- Tighten up Bach and boat write-offs - saving $109 million
- Close a Livestock tax loophole - that's $184 million
- Beef up the IRD - saving $423 million
Total savings: $833 million.
The bach changes will be based on how much the house is used - and there are questions about how that will work.
Waiheke holiday homes manager Richard Potter says it will depend.
“It will come down to an honesty thing between the property owner and the accountant.”
And tax expert Deloitte chief executive Thomas Pippos says the crackdown is underwhelming.
“The key phrase here is "a little bit fairer" - it doesn't really change the goal posts in any material way in terms of the tax system.”
But the changes do mean a little bit less for over 172,000 New Zealanders.