**Disclaimer: This blog is intended as a general guide and may not cover all specific situations or reflect the latest legislative changes. For personalised advice that considers your unique circumstances, please consult a qualified tax professional.
Key Individual Tax Rate Threshold Changes (Effective 1 July 2024)
While the tax rates remain the same, the income thresholds have been adjusted to account for inflation. As this change takes effect partway through the tax year, the 2025 tax year will use a composite rate, meaning full benefits will be realised by 2026. Here’s a summary of the updated income thresholds:
- 10.5% on income up to $15,600
- 17.5% on income from $15,601 to $53,500
- 30% on income from $53,501 to $78,100
- 33% on income from $78,101 to $180,000
- 39% on income over $180,000
These adjustments offer potential tax savings, which can be previewed using our [Tax Calculator].
Bright-Line Property Rule Update
The bright-line rule period for taxing gains on residential property sales has returned to a 2-year threshold from 1 July 2024. This applies to residential properties (not the main home) where ownership changes within two years of purchase. The sale date is based on the date you sign a binding agreement, while the purchase date uses the settlement date. Exemptions for primary residences, inherited properties, and estates remain.
Interest Deductibility on Residential Rentals
Interest deductibility is gradually being restored for residential rental properties. Here’s how the phased approach will work:
- Existing Builds (purchased before 27 March 2021):
- 50% deductible for the 2024 tax year
- 80% deductible for the 2025 tax year
- Fully deductible from the 2026 tax year onward
- Existing Builds (purchased after 27 March 2021):
- 0% deductible for the 2024 tax year
- 80% deductible for the 2025 tax year
- Fully deductible from the 2026 tax year onward
- New Builds (Code of Compliance issued post 27 March 2020):
- Fully deductible for the 2024 tax year onward
Depreciation Changes for Commercial Buildings
From 1 April 2024, depreciation on commercial buildings will return to 0%. This reversion reflects the government’s assessment of economic life expectancy, so plan for potential tax impacts on commercial investments.
Public Service Vehicle Rate for 2024
For motor vehicle expense claims, the Public Service rate is set at $1.04 per kilometre for up to 14,000 km, with $0.35 per km beyond that. This rate is for businesses not directly claiming fuel, depreciation, or maintenance expenses.
Inland Revenue Use of Money Interest (UOMI) and Penalties
UOMI applies to underpaid tax balances and is currently 10.91% (deductible when paid). Avoiding these charges is best managed by monitoring profit fluctuations and setting aside funds for tax obligations. Note that penalties for late payments or incorrect returns are non-deductible.
Working for Families Tax Credits
The Working for Families Tax Credits and In-Work Tax Credits support eligible families with children. For the 2024 tax year, families with joint incomes below the following thresholds qualify:
- 1 child: Family Tax Credit up to $68,000; In-Work Tax Credit up to $81,500
- 2 children: Family Tax Credit up to $89,000; In-Work Tax Credit up to $104,000
- 3 children: Family Tax Credit up to $111,500; In-Work Tax Credit up to $114,500
Family income for these credits includes taxable income and other specified sources, which may differ from taxable income alone.