The highlights for Budget 2010:

• Personal tax cuts across the board from 1 October 2010 with the top rate dropping from 38% to 33%
• An Increase in GST from 12.5% to 15% from 1 October 2010
• A cut in the company tax rate from 33% to 28% from the start of the 2011/12 income year
• A suite of measures against property investment including removal of depreciation on all building and tightening of QC and LAQC rules
• Removal of all 20% depreciation loading on all new depreciable assets acquired from budget day
• Reducing taxes on savings vehicles to 28%
• Capping interest deductions from foreign owned companies by reducing the debt to asset ratio to 60% from 75%
• Measure to compensate the vulnerable to offset the GST rate increase

• Measure to reduce abuse of entitlements and improve integrity of the tax system.

Summary

The drop in the company tax rate from 30% to 28% and the timing of the cut was unexpected.

By introducing the tax cut from the start of the 2011/12 income year New Zealand beats Australia to the jump. In fact at the Vero Excellence in Business Awards last night, John Key said that they had already locked in the company tax rate drop when Australia announced it was doing the same.

It is a smart move as it will help take the sting out of the depreciation changes. These changes will have immediate effect on business profits enabling them to move and invest with more certainty.

In a move similar to the previous cut in the company tax rate there will be a transitional period of two years during which companies can attach imputation credits arising from tax paid at 30% at an imputation ratio of 30/70.

Any company provisional taxpayer that pays provisional tax based on the standard uplift basis - that is, based on a prior year tax liability - will have its standard uplift automatically adjusted to take into account the personal tax cuts.

Act Now

In light of these changes, now is the perfect time to review your tax strategy and structure.

You may be looking for some specific advice or simply want to talk to someone about your tax planning options. WHK tax and business advisors can assist you in determining the opportunities and issues brought about by these changes and ensure you and your business are able to maximise the opportunity these changes present.

Knowledge, advice and planning are key to a positive outcome when it comes to your finances and tax.

Our tax advisers are trained not only to know what the legislation says but are able to explain what it means to your business and find the best solution from a taxation and commercial perspective.

WHK tax advisors can provide informed and specialised tax advice in relation to a broad spectrum of tax areas, including:

• Advice on, or reviews of, GST, FBT, PAYE, withholding tax and other tax compliance obligations
• Structuring advice for businesses and specific transactions
• Cross border transactions
• Managing business successions and exit strategies
• Remuneration planning and salary packaging
• Overseas investments in controlled foreign companies and foreign investment funds
• Inland Revenue disputes procedures
  

What you need to do now is call one of our WHK tax advisors. This won't cost you anything but it could save you a lot.