TAX TIDBITS
Issue Twenty-Eight, October 2008
In this months issue:
Reductions in tax rates – Provisional Tax
Provisional tax reductions
As you may be aware the Labour Government have reduced individual tax rates effective from 1 October 2008.
For provisional tax payers the impact is a reduction in the amount of 2009 provisional tax payable. The change in tax rates affects how you calculate your provisional tax instalments.
The standard option of calculating provisional tax for the 2009 year is the residual income tax (RIT) for the immediately preceding income year minus $730.00 + 5%. If you have not prepared your 2008 return of income the calculation is the 2007 RIT minus $730.00 + 10%.
See the table below for details:
|
Year for provisional tax
|
Year of RIT amount used
|
Adjustment
|
|
|
2007
|
RIT - $730 + 10%
|
|
2008
|
RIT - $730 + 5%
|
You are also not a provisional tax payer unless your RIT now exceeds $3,230. Previously this was $2,500 and therefore adjusted by the $730 as per the above calculations.
Income tax rates for individuals effective from 1 October 2008
|
Taxable income
|
PAYE rate for every
|
PAYE rate for every
|
|
up to $14,000
|
12.5 cents
|
13.9 cents
|
|
$14,001 to $40,000 inclusive
|
21 cents
|
22.4 cents
|
|
$40,001 to $70,000
|
33 cents
|
34.4 cents
|
|
$70,000 and over
|
39 cents
|
40.4 cents
|
Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
