Tax change cuts bills

‘‘Fewer people will have tax bills to pay this year.’’

Stuart Nash Revenue Minister

The Government is extending the threshold under which New Zealanders’ tax debt is written off, which it says should mean relief for about 149,000 taxpayers.

‘‘Fewer people will have tax bills to pay this year,’’ said Revenue Minister Stuart Nash.

‘‘Inland Revenue’s end-of-year automatic income tax calculation process for individuals is under way and is expected to run until early next month.

‘‘It is the annual wash-up which results in people either having tax to pay or receiving a refund.’’

For the 2019-20 income tax year, tax debt up to $200 will be written off. The usual threshold for writing off tax is $50. It will return to that level in future years.

‘‘Increasing the write-off threshold will reduce tax bills for approximately 149,000 taxpayers. Writing off those amounts of tax may not seem huge to everyone, but it can be significant for someone experiencing financial stress.’’

He said, in the 2018-19 year, about half of those who had a tax bill up to $200 were earning less than $60,000 a year.

‘‘We’re doing everything we can to help households as we move into the economic recovery phase.

‘‘The auto-calc process has meant that people have already started receiving refunds. As at June 10, there have been 2.3 million assessments carried out resulting in $586 million in tax refunds and $118m in tax bills to pay.‘‘

Once the process is complete, Inland Revenue expects to issue refunds in excess of $650m as part of individual income tax assessment process.

‘‘Legislation is still required to amend the returns for the 2019-20 tax year. For following tax years, the threshold will revert to the $50 limit,’’ Nash said.

As of last year, Inland Revenue has been automatically calculating tax returns for people earning wages, salary, interest and dividends, and issuing refunds or sending bills.

The personal tax reforms were expected to leave people about $100m a year better off, overall, because of the reduction in unpaid refunds. Previously, taxpayers had to apply to claim the money.