The New Zealand National Party has successfully formed coalitions with ACT New Zealand and New Zealand First to establish the 54th parliament. National’s coalition agreements with ACT and with New Zealand First set out the frameworks for collaboration aligned with the policy priorities of each party. Additionally, the government has unveiled its 100-day plan. We outline below what specific agreements the Coalition Government have made regarding taxation.
First 100-day plan
- The Auckland Regional Fuel Tax, which was introduced in July 2018, will be repealed.
- Fuel tax increases proposed by the previous Government will be cancelled. Fuel excise taxes will, in time, be replaced with electronic road user charging for all vehicles, starting with electric vehicles.
- The Clean Car Discount scheme will be repealed by 31 December 2023.
- All work on the proposed Income Insurance Scheme, that was to be funded through employee and employers’ contributions, will be stopped.
Income tax
- Adjustments to income tax thresholds will proceed from 1 July 2024, in line with the Government’s commitment to delivering tax relief.
- Under the National and Act agreement, the Parties have confirmed there is no ongoing commitment to income tax changes, including threshold adjustments, beyond those to be delivered in 2024.
- Under the National and New Zealand First agreement, the Parties have agreed to assess the impact inflation has had on the average tax rates by or before 2026, and to progress “tax relief of up to $100 per fortnight for an average income household and a Family Boost childcare tax credit of up to $150 per fortnight.”
Property
- Mortgage interest deductibility for residential rental properties will be restored with 60 per cent deductibility in 2023/24, 80 per cent in 2024/25, and 100 per cent in 2025/26.
- The proposed 15 per cent foreign buyer tax on residential properties sold to non-residents for $2 million or more will not proceed.
- The Government will introduce “financial incentives for councils to enable more housing, including considering sharing a portion of GST collected on new residential builds with councils.”
IRD
- Funding for Inland Revenue tax audits will be increased to expand the IRD tax audit capacity and minimise taxation losses due to insufficient IRD oversight.
- In response to ACT’s concerns, National’s proposed “Taxpayer’s Receipt” requiring Inland Revenue to provide taxpayers with Government expenditure details, will not proceed.
The coalition parties have agreed to progress the policies set out in the National Party’s Fiscal Plan, Tax Plan, 100-day plan and 100 point economic plan, with some modifications, as above.
As part of its mini-Budget on 20 December 2023, the Government has confirmed it will be:
- Returning the bright-line test to a two-year period from 1 July 2024.
- Removing depreciation deductions for commercial and industrial buildings.
For more information:
Coalition Agreement: New Zealand National Party and ACT New Zealand
Coalition Agreement: New Zealand National Party and New Zealand First
If you have any questions or need advice on any of the above, please contact your local William Buck advisor – we’re here to help.
