Budget 08

[marsden_online]

I'm not concerned about the tax cuts in general although they look nice - I don't personally find the burden too onerous and I like the availability of public services. I'm not going to complain though :)

Of more interest is this snippet:

Increasing the GST registration threshold from $40,000 to $50,000

This gives me some breathing space :) Some of my forecasts were getting dangerously close to the 40k mark - and you have to register if you expect to break the margin over the next 12 months time period, regardless of if you actually make that much.

"In theory the current personal tax system has three rates: 19.5 per cent up to $38,000, 33 per cent from $38,001 to $60,000, and 39 per cent above $60,000 a year.

"In practice, the operation of the Low Income Rebate for earned income creates an effective four-step scale with the bottom step split into two: 15 per cent up to $9500 a year and 21 per cent from $9501 to $38,000.

"This rebate penalises investment income where it is not the sole source of income. In addition, the bottom threshold of $9500 has not moved since 1988.

"At the completion of the Budget 2008 tax-cut programme the rates will be 12.5 per cent on the first $20,000 of income, 21 per cent from $20,001 to $42,500, 33 per cent from $42,501 to $80,000, and 39 per cent above $80,000.

"A full implementation of this will mean for individuals on a full-time income tax cuts of between $1130 and $2870 a year, or roughly $22 to $55 a week.

"The intermediate stages will see the new rate of 12.5 per cent on income up to $14,000 from 1 October this year with the threshold lifting to $17,500 on 1 October 2010. The threshold for the 33 per cent will increase to $40,000 a year from 1 October. The top threshold will increase to $70,000 on 1 October and then to $75,000 from 1 April 2010...

Comments

[the-piedpiper.livejournal.com]

I don't see how the threshold for GST would personally affect the amount of money you get.. because generally the supplier of the good or service passes the cost onto the consumer of the good or service?? All it would mean is that you actually have to register. (Unless you are concerned that passing on the cost of the GST will damage the relationship/discourage them from using your good or service in the future, in which case, I understand the concern).

And if you register, but don't make that much money, you can claim it back I think.

[marsden-online.livejournal.com]

Registration effectively means tax returns and payments every 2 months instead of annually, with a commiserate increase in time spent dealing with receipts, accounting fees, and likelyhood of an IRD audit.

At the moment receipts go into one of a few, on which I claim back various % of the total (7.5% of house related expenses, 25% of car related expenses, 50% of computer related expenses, etc). I don't need to track GST separately.

And as a private contractor, it may not be as easy for me to pass on all those overheads as for say a retailer. It's not existing clients that (currently) are a concern so much as pricing myself for new clients.

But basically, the less I have to do with the bureaucracy, the happier my life is :)

Yes, you can claim it back, but you have to pay it first - which is a cashflow issue.

[the-piedpiper.livejournal.com]

Yeah I see what you mean. That would be a pain for someone in your situation.

I have an exam on all this income tax and GST next week so I'm finding it pretty interesting... kind of.