Budget 2004 - tax issues

The major area of new spending in today's budget is the government's 'Working for Families' package of social assistance measures, some of which will be delivered through the tax system. Detailed information on these measures is published at www.ird.govt.nz and www.msd.govt.nz.

Tax policy announcements in Budget speech

• Legislation to deal with weaknesses in current tax rules applying to banks may be included in the taxation bill scheduled for introduction in late 2004, after conclusion of a consultative process involving the banking industry.
• A forthcoming issues paper will look at ways of reducing tax biases in the depreciation rules, practical problems, and whether the current depreciation rate for buildings is appropriate, given the growing practice of re-characterising rental houses into components to take advantage of higher depreciation rates. Any legislative changes are expected to be included in the late 2004 bill.

All Budget material is available on line at www.treasury.govt.nz/budget2004.