Budget 2005 tax announcements

The Budget 2005 business tax package introduces measures designed to encourage savings, ensure more productive use of capital, improve access to worldwide capital, skills and labour, and reduce compliance costs. See Multi-million dollar suite of pro-business tax cuts.

• Savings. New rules on taxing income from domestic and offshore portfolio investment, aimed at introducing greater consistency in the taxation of investment income, are being developed. See Tax changes for low income and small investors and Fairer rules on taxing investment income.

• Depreciation. New tax depreciation rates will better reflect how assets decline in value and reduce compliance costs. See Depreciation changes for better investment decisions.

• International recruitment. To remove a tax barrier to recruitment to New Zealand, a temporary tax exemption on certain foreign income of new migrants and returning New Zealanders who have been non-resident for tax purposes for at least ten years will be introduced. See Reducing tax costs for international recruitment.

• Securities lending. The tax rules for securities lending will be brought into line with the rules on other commercial transactions and with those of countries such as Australia. See Updated rules for securities lending.

Legislation allowing personal tax thresholds to be adjusted for inflation every three years will be introduced in 2006, to apply from 2008. See Income tax inflation indexed from 1 April 2008.

Legislation providing for KiwiSaver, a government-sponsored work-based savings scheme to be administered by Inland Revenue, will be introduced this year, for implementation in 2007. See statements (Word 109 KB)and www.securingyourfuture.govt.nz.

The full set of Budget 2005 documents is available at www.treasury.govt.nz/budget2005.