Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


New secondary tax rate announced


Michael Cullen

7 October, 2008
New secondary tax rate announced

Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced today that the Cabinet yesterday agreed to a new, bottom secondary tax rate of 12.5 per cent.

The decision flows from the major package of personal tax cuts announced in Budget 2008.

"Today's announcement ensures that those with second incomes do not have too much tax deducted from their pay packet," Dr Cullen said.

"Secondary tax rates are not intended to tax income earned from two or more jobs more heavily than the same income derived from a single job. Rather they seek to ensure taxpayers do not inadvertently end up with a tax bill at the end of the tax year." Hon Peter Dunne said.

It is important to note that introducing a new secondary rate is essentially about timing. Anyone working a second job who is concerned that they have been over-taxed, should contact Inland Revenue. The new rate comes into effect on 1 April 2010.


Note:

Reductions to the secondary tax codes are not actually tax cuts. Tax obligations remain the same, the decision to lower the secondary tax rates reduces the chances that a person will be over taxed of the course of the year. Where this occurs tax payers are, and will remain, entitled to a tax refund at the end of the tax year.

A secondary tax code is the rate that is applied to withhold tax from a person's employment income that he or she earns from a second job. Income from a person's main job has tax withheld using the progressive income tax rates and thresholds. A secondary tax code reflects the tax rate that people face on the last dollar of their total income.

For example, a person may earn $30,000 before tax from primary employment income. Tax is withheld by the employer on this income according to the progressive income tax scale. Under this example and using the new tax rate structure the employer withholds tax at a rate that reflects that the first $14,000 is taxed at 12.5% and the next $16,000 is taxed at 21%. If the person earned an additional $4,000 from a second job the employer would withhold tax using a secondary tax rate that reflects the tax rate on the last dollar of total income earned - 21%.

The current secondary tax codes are 21%, 33% and 39%. The new bottom rate will be added to this range of rates.

A 12.5% secondary tax code is being introduced to cater for low income people that have a second job; such as New Zealand superannuitants and beneficiaries. This should ensure that tax is not over-withheld on their secondary employment income. The 12.5% secondary tax code is taking effect from 1 April 2010 in order to coincide with the increase to $17,500 of the income threshold at which the 21% tax rate starts applying. This reduces the likelihood that low income people will face tax bills due to having too little tax withheld on their secondary income.


ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Open Source // Open Society - Full Coverage

War: What’s To Commemorate?

Gordon Campbell in Werewolf: It is easy to know what we don’t want to commemorate on Anzac Day this year...

In fact, is there anything that can be validly commemorated on this 100th anniversary of Gallipoli?

Beyond, that is, a fleeting sense of empathy with the thousands of soldiers killed or wounded on April 25 1915 and in the months thereafter, until the whole thing was finally called off in December 1915.

(Most of the New Zealand survivors were transferred to the trenches in France, and eventually to the battle of the Somme in 1916.) More>>

 

PARLIAMENT TODAY:

Peter Ellis Case: Minister Declines Request For Commission Of Inquiry

Justice Minister Amy Adams has declined a request from supporters of Peter Ellis for a Commission of Inquiry on the basis that an inquiry cannot be used to determine the liability of any person. More>>

Quakes: New Process For Red Zone Crown Offers

Canterbury Earthquake Recovery Minister Gerry Brownlee has announced a process to give everyone a say on the Crown offers to owners of vacant, commercial/industrial and uninsured properties in the Residential Red Zone. More>>

ALSO:

Gordon Campbell: On The Battle Obama Is Waging Over The TPP

For the past two and a half years, this column has been arguing that the fate of the Trans Pacific Partnership (TPP) deal will hinge on whether US President Barack Obama can win Trade Promotion Authority (TPA) from Congress... Last week, the White House finally, finally unveiled a draft TPA Bill. More>>

ALSO:

Greens: Govt Breaks Free Doctors Visit Promise To Kids

Documents obtained by the Green Party show that the Government decided to fund only 90 percent of doctors’ visits for children suffering from an injury in an attempt trim the cost of the so-called “free” visits. More>>

ALSO:

Other Wars: Extension Of NZDF Commitment In Afghanistan

The New Zealand Defence Force’s commitment of mentors and support staff to the Afghan National Army Officer Academy in Afghanistan has been extended out to December 2016, Defence Minister Gerry Brownlee says. More>>

PM's Press Conference: Auckland Property Prices Increasing "Too Rapidly"

John Key accepted that Auckland property prices 'are going up too rapidly” in a press conference held today in Wellington, however he said that this is not anything new. More>>

ALSO:

Press Conference: ANZAC PMs Concerned About ISIL Bringing The War Home

Prime Minister Key and Prime Minister Abbott spoke of the bond formed between Australia and New Zealand in the “baptism of fire” of Gallipoli. Abbott stated that New Zealand and Australia’s values and interests are linked, and this is reflected in the joint operation in Iraq which will begin shortly. More>>

ALSO:

GCSB's China Shopping: Key Damages China Relationship

Evidence that the Key Government recklessly approved a GCSB spying operation to intercept Chinese diplomatic communications between offices in Auckland will pointlessly damage our relationship with China, the Green Party said today. More>>

ALSO:

Gordon Campbell: On The Reserve Bank And Auckland Housing

The ‘crisis – what crisis?’ response by the government to the Auckland housing price bubble is no longer acceptable. So says Reserve Bank governor Grant Spencer... More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news