Oh, goody – Nash says some tax relief is in the offing but only a few of us will benefit from it

After a string of spending decisions over the past two days, the Government today announced some cheering news on the revenue-gathering side of its activities.  It is moving to ease financial stress for around 149,000 taxpayers by changing the rules around write-offs for tax debt.

As a consequence, fewer people will have tax bills to pay this year.

But not too many fewer.

According to Treasury figures,  we have 3,850,000 taxpayers who generate $36,850 million of revenue.  Around 4% of those taxpayers – by the looks of it – will benefit from the Government’s relaxing of the rules.

Revenue Minister Stuart Nash said Inland Revenue’s end-of-year automatic income tax calculation process for individuals is currently underway and is expected to run until early July.

This is the annual wash-up which results in people either having tax to pay or receiving a refund.

For the 2019/20 income tax year (Nash declared), tax payable up to $200 will be written off.  The usual threshold for writing off tax is $50.

Writing off those amounts of tax may not seem huge to everyone, Nash acknowledged – but it can be significant for someone experiencing financial stress.

In the 2018/19 year for example, around half of those who had a tax bill up to $200 were earning less than $60,000 a year.

The auto-calc process has resulted in people already receiving refunds.  At 10 June, 2.3 million assessments had been carried out resulting in $586 million in tax refunds and $118 million in tax bills to pay.

Once the process is complete, Inland Revenue expects to issue refunds of more than $650 million as part of individual income tax assessment process.

The change was agreed last week, Nash said, but legislation is still required to amend the returns for the 2019/20 tax year. For following tax years, the threshold will revert to the $50 limit.

The auto-calc process applies to people whose income is only salary, wages, interest or dividends, not those who use the IR 3 tax return.

The announcement was one of several from the Beehive Buglers in the past two days

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