Budget 2007 tax announcements

The business tax reform package announced in Budget 2007 ($3.4 billion for investment and innovation) includes:

• A cut in the company tax rate to 30%, with effect from 2008-09. See:
  • Company tax rate change: questions and answers.
• A 15% tax credit for R&D. See:
  • R&D fact sheet
  • Questions and answers.
• A reduced, 30% tax rate for certain savings vehicles. See:
  • Savers' fact sheet
  • Questions and answers.
• An active income exemption for New Zealand-controlled foreign companies. See:
  • International tax fact sheet
  • Questions and answers
  • New Zealand's International Tax Review: an Update

Major KiwiSaver reforms (Budget gives $40 a week to support savings) include:

• A new members' tax credit that matches their contributions up to $20 a week. See:
  • Savers – Fact sheet and Questions and answers
• Compulsory matching employer contributions, to be phased in over four years, and a new tax credit to reimburse employers for the cost of matching contributions, capped at $20 a week. See:
  • Employers – Fact sheet and Questions and answers

See also:

• Snapshot of KiwiSaver
• Providers of Superannuation schemes – Fact sheet
• KiwiSaver – General Q&A
• www.kiwisaver.govt.nz

Other tax measures include:

• Tax incentives to boost charitable giving. See:
  • Fostering a culture of charitable giving, Fact sheet – charitable giving and Investing in a culture of charitable giving: questions and answers
• Increased funding for Inland Revenue to strengthen auditing of property transactions. See:
  • Tougher action on property speculation

The full set of Budget 2007 documents is available at www.treasury.govt.nz/budget/2007.