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Taxation (Budget Measures) Bill
1. Title
This Act may be cited as the Taxation (Budget Measures) Act 2019.
2. Commencement
This Act comes into force on the day after the date of receiving the Royal assent.
3. Purpose
The purpose of this Act is to adjust revenue.
Part 1 - Amendments to the Income Tax Act 2007
4. Principal Act amended
In this Part, the Income Tax Act 2007 is the principal Act.
5. Section CB 1 amended
Repeal section CB 1(3).
6. Section CB 37 repealed
Repeal section CB 37.
7. Section CC 14 repealed
Repeal section CC 14
8. Section MA 8 amended (Some definitions for family scheme)
Insert the following definition in appropriate alphabetical order:
in-work tax credit means the component of the abating WFF tax credit calculated using the formula in section MD 10 (Calculation of in-work tax credit)
9. Section MD 3 replaced and new sections inserted
Following section MD 2, replace section MD 3 with the following sections:
Family tax credit.
MD 3. Calculation of family tax credit
Entitlement
(1) A person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) is entitled to an amount of family tax credit calculated using the formula in subsection (2).
Formula
(2) The formula isâ
prescribed amount Ă days Ă· 365.
Definition of items in formula
(3) The items in the formula are defined in subsections (4) and (5).
Prescribed amount
(4) Prescribed amount is the sum of the following amounts:
(a) for the eldest dependent child for whom the person is a principal caregiver during the entitlement period, 1 of the following, as applicable:
- (i) $4,822, if the child is younger than 16:
- (ii) $5,303, if the child is 16 or older:
- (iii) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period; and
(b) for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, 1 of the following, as applicable:
- (i) $3,351, if the child is younger than 13:
- (ii) $3,822, if the child is 13, 14, or 15:
- (iii) $4,745, if the child is 16 or older:
- (iv) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 13 during the entitlement period:
- (v) a weighted average of the amounts in subparagraphs (ii) and (iii) that reflects the proportion of the entitlement period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period.
Days
(5) Days is the number of days in the entitlement period.
Order in Council increasing amount
(6) In subsection (4)ï»ż(a)ï»ż(i) and (ii), and (b)ï»ż(i) to (iii), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
When another person cares for dependent child
(7) A family tax credit must be reduced in proportion to the time in the entitlement period that a dependent child spends in the exclusive care of another person who qualifies under section MC 2.
In-work tax credit
MD 4. Entitlement to in-work tax credit
Requirements
(1) A person is entitled to an in-work tax credit for a child if, for an entitlement period, the person meets the 5 requirements of sections MD 5 to MD 9. When another person entitled to in-work tax credit or child tax credit
(2) If 2 persons are entitled to an in-work tax credit or a child tax credit for a child for an entitlement period, the entitlement of each is not affected by the entitlement of the other person.
MD 5. First requirement: personâs age
The first requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 is 16 or older.
MD 6. Second requirement: principal care
When child financially dependent
(1) The second requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 is the principal caregiver for a child who is financially dependent on them.
Inclusions
(2) A child for whom payments are made under section 363 of the Oranga Tamariki Act 1989, or a child for whom an orphanâs benefit or an unsupported childâs benefit is paid under section 43 or 46 of the Social Security Act 2018, is treated as financially dependent on the person.
Relationship with section MC 8
(3) Subsection (2) overrides section MC 8 (Continuing requirements).
MD 7. Third requirement: residence
Third requirement
(1) The third requirement for an entitlement to an in-work tax credit is that the person or child referred to in section MD 4 meet the residence requirements of subsections (2) and (3), as applicable.
When person meets residence requirements
(2) The person meets the residence requirements of subsection (1) if the personâ
(a) has beenâ
- (i) both a New Zealand resident and present in New Zealand for a continuous period of 12 months at any time; and
- (ii) resident in New Zealand under section YD 1 (Residence of natural persons) on the days for which a tax credit arises under section MD 1; and
(b) is neither a transitional resident, nor the spouse, civil union partner, or de facto partner of a transitional resident.
When child meets residence requirements
(3) The child meets the residence requirements of subsection (1) if the child is both resident and present in New Zealand for the entitlement period.
MD 8. Fourth requirement: person not receiving benefit
The fourth requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 and their spouse, civil union partner, or de facto partner, do not receiveâ
(a) an income-tested benefit; or
(b) a basic grant and an independent circumstances grant made under regulations made under section 193 of the Education Act 1964, section 303 of the Education Act 1989, or an enactment substituted for those sections; or
(c) a parentâs allowance continued by clause 3 of Schedule 1 of the Veteransâ Support Act 2014 or a childrenâs pension under section 72 or 75 of that Act.
MD 9. Fifth requirement: full-time earner
Normally full-time earner
(1) The fifth requirement for an entitlement to an in-work tax credit is that either or both the person referred to in section MD 4 and their spouse, civil union partner, or de facto partner, is normally a full-time earner (the earner). Also, the earner mustâ
(a) derive income as set out in subsections (2) and (3) as a full-time earner or derive an amount of compensation described in subsection (4); or
(b) if they are a full-time earner in relation to a close company, be a major shareholder in the close company, and the company must derive gross income in the income year.
Income
(2) The income referred to in subsection (1)ï»ż(a) isâ
(a) a PAYE income payment that isâ
- (i) not excluded under subsection (3), although it does not matter if the person also derives income of the type described in subsection (3); and
- (ii) not a benefit or allowance described in section MD 8; or
(b) income, other than from a PAYE income payment, to which section RD 3B or RD 3C (which relate to income other than PAYE) applies; or
(c) income from a business carried on for profit; or
(d) an amount paid or benefit providedâ
- (i) by a person (the claimant), who receives a personal service rehabilitation payment from which an amount of tax has been withheld at a rate specified in section RD 10B (Amounts of tax for schedular payments); and
- (ii) to another person for providing to the claimant a key aspect of social rehabilitation referred to in paragraph (c) of the definition of personal service rehabilitation payment in section YA 1 (Definitions).
Exclusions from income
(3) The following PAYE income payments are excluded from income under subsection (2):
(a) a payment referred to in paragraphs (a) to (c) of the definition of accident compensation earnings-related payment:
(b) a PAYE income payment referred to in section RD 5(6)ï»ż(a) (Salary or wages), other than a parental leave payment or preterm baby payment referred to in section CF 1 (Benefits, pensions, compensation, and government grants):
(c) a PAYE income payment referred to in section RD 5(6)ï»ż(bb), (bc), or (bd):
(d) a schedular payment that is a contract payment for a contract activity or service of a non-resident contractor:
(e) an amount paid as a result of incapacity, suffered before 1 January 2006, due to personal injury by accident within the meaning of section 26 of the Accident Compensation Act 2001.
Compensation payments for personal injury
(4) A person meets the fifth requirement ifâ
(a) they receive a child tax credit for an entitlement period ending on 31 March 2006; and
(b) on or after 1 January 2006, they or their spouse, civil union partner, or de facto partner suffers an incapacity due to personal injury by accident within the meaning of section 26 of the Accident Compensation Act 2001; and
(c) weekly compensation within the meaning of section 6 of the Accident Compensation Act 2001, is or will be paid for the incapacity; and
(d) the person or their spouse, civil union partner, or de facto partner would have met the fifth requirement in deriving income as a full-time earner under subsection (1)ï»ż(a) and been eligible for the tax credit calculated using the formula in section MD 10 at the time of the incapacity had this section come into force before the date of the incapacity.
Absence from work due to birth of child
(5) Despite subsection (1), a person also meets the fifth requirement if they are normally a full-time earner as described in subsection (1)ï»ż(a) but, in a 1-week period, they do not work, or work less than, the number of hours required to be a full-time earner because of the birth of a child. However, this subsection applies only if the person is entitled to receive the parental tax credit for the child.
MD 10. Calculation of in-work tax credit
Entitlement
(1) A person who meets the requirements of section MD 4 is entitled to an in-work tax credit calculated using the formula in subsection (2).
Formula
(2) The formula isâ
(amount A amount B Ă (children â 3)) Ă weekly periods Ă· 52.
Definition of items in formula
(3) In the formula,â
(a) amount A is $3,770:
(b) amount B is $780:
(c) children is the greater ofâ
- (i) 3; and
- (ii) the number of children for whom the person is allowed the in-work tax credit:
(d) weekly periodsâ
- (i) for 2 or more entitlement periods forming 1 continuous period, is the number of whole periods of 1 week in the continuous period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is a full-time earner described in section MD 9(1)ï»ż(b):
- (ii) for an entitlement period to which subparagraph (i) does not apply, is the number of whole periods of 1 week in the entitlement period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is a full-time earner described in section MD 9(1)ï»ż(b).
Order in Council increasing amount
(4) In subsection (3)ï»ż(a) and (b), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
10. Section MF 1 amended (Application for payment of tax credit by instalment)
Replace subsection (2) with:
(2) The person may ask the Commissioner to pay the tax credit by instalment or by a lump sum equivalent to up to five yearsâ worth of full-year abatement (within the meaning of MF 4D) to them.
11. Section MF 2 amended (When person not entitled to payment by instalment)
Repeal section MF 2(a)(i).
12. Section YA 1 amended (Definitions)
(1) Repeal the definition for âincome from productive assetsâ.
(2) Repeal the definition for âproductive assetsâ.
(3) Insert the following definition in appropriate alphabetical order:
in-work tax credit means the component of the abating WFF tax credit calculated using the formula in section MD 10 (Calculation of in-work tax credit)
13. Schedule 1 Part A amended (Basic income rates)
(1) Replace section 1 Table 1 with the following:
Row | Range of dollar in taxable income | Tax Rate |
---|---|---|
1 | $0 - $14,000 | 0 |
2 | $14,001 - $48,000 | 0.15 |
3 | $48,001 - $70,000 | 0.25 |
4 | $70,001 upwards | 0.30 |
(2) Replace the contents of section 2 with the following:
To the extent to which a company does not have a basic rate under clauses 3 to 9, the basic rate of income tax for the company on each dollar of the companyâs taxable income is 0.22.
(3) Repeal section 3.
Part 2 - Amendments to the Land Value Tax Act 2017
14. Principal Act amended
In this Part, the Land Value Tax Act 2017 is the principal Act.
15. Rate amended
Replace â2â with â3â.
Part 3 - Amendments to the Carbon Tax Act 2017
16. Principal Act amended
In this Part, the Carbon Tax Act 2017 is the principal Act.
17. Schedule 1 amended
In section 1, replace â$40.00â with â$50.00â
Part 4 - Amendments to the Waste Minimisation Act 2008
18. Principal Act amended
In this Part, the Waste Minimisation Act 2008 is the principal Act.
19. Schedule 1 amended
In section 27, replace each instance of â$10.00â with â$12.00â
Part 5 - Amendments to the Goods and Services Tax Act 1985
20. Principal Act amended
In this Part, the Goods and Services Tax Act 1985 is the principal Act.
21. Section 8 amended (Imposition of goods and services tax on supply)
(1) In section 8(1), â13â is replaced by â14â.
(2) Subsection (1) applies to supplies made on or after the commencement of the Taxation (Budget Measures) Act 2019.
22. Section 12 amended (Imposition of goods and services tax on imports)
(1) In section 12(1), â13â is replaced by â14â.
(2) Subsection (1) applies to the importation of goods on or after the commencement of the Taxation (Budget Measures) Act 2019.
B.195 - Taxation (Budget Measures) Bill was authored by /u/FinePorpoise (National) and is sponsored by the Minister for Finance, /u/Fresh3001 (National), on behalf of the government.
Debate will conclude at 6 PM, 6/9/2019.
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