Happy New Financial Year
1st April is the first day of the financial year, what the new year will bring us? Many changes
From 2021 onwards any portfolio investment entity (PIE) income and tax will be included in your end of year income tax assessment. This is calculated using Prescribed investor rates (PIR), rather than income tax rates. Recent law changes mean that where PIE tax has been overpaid or underpaid it will form part of the overall income tax assessment and be offset against any income tax over or under payment.
Schedular payment clients who have received the COVID-19 Wage subsidy will need to complete a 2021 IR3 individual income tax return as they are required to declare this income under the new key point for Government subsidies.
If your receive joint investment income, IRD will allocate this from the information the investment income provider has returned. Where an investment provider only holds one IRD number, 100% of the income will be allocated to that IRD number. It is important that you advise your investment income provider of your IRD number, so that income can be correctly allocated. You can also update the ownership percentage in myIR providing you have this income showing.
The government introduces a new top personal income tax rate of 39% on annual income exceeding $180,000 for the 2021-22 and later income years.
Also need to mention the proposed change for residential property has been released on the 24th March, the government has announced it intends to extend the bright-line period to 10 years for residential property except newly built homes. Inherited properties and those which has been the owner’s main home for the entire time they owned it will continue to be exempt from all bright-line tests.
The Government has agreed to change the rules on claim interest on loans which used for residential properties as an expense against their income from those properties.
This is the nutshell of the changes, please come back to my blog in the future for more detailed updates, if you have any questions regarding your situation please feel free to contact me.
