Tax cuts may be around the corner (...but say goodbye to the EV rebates!)
Tax Alert - November 2023
By Viola Trnski & Robyn Walker
While the end of a whirlwind campaign brings welcome respite to some, the “winners” of the General Election will now be around the negotiating table ironing out the details of a coalition agreement to form the 54th New Zealand Government.
We canvassed the election policies of key players in an earlier edition and now take a closer look at the current state of tax affairs and the various promises and statements made by National, ACT and New Zealand First. To get more depth than just campaign promises we dig into comments in Hansard, Finance and Expenditure Committee hearings, and questions from reporters also shed some light on what we might see happen next.
These projections must be taken with a grain of salt. While there are some clear areas of consensus between National, ACT, and New Zealand First, areas of ambiguity remain and will need to be ironed out.
We’ve also summarised key legislation to keep an eye on, and when you can expect any changes to take place.
Where are we at?
The General Election was held on 14 October. The results showed a turn to the right with National and ACT, who gained a significant number of seats, as well as New Zealand First who made it back into Parliament. National and ACT’s majority currently sits on a knife’s edge, with preliminary results affording the two parties 61 seats combined (out of 120 – subject to confirming the extent of the Parliamentary overhang caused by parties winning more electorate seats than party votes). In any case, the National Party may wish to garner support from both ACT and New Zealand First in some form for stability, because one rogue MP can cause such a slim majority to fall apart.
The half-a-million special votes will determine the final makeup of our next Government and whether New Zealand First will need to be a part of it. These results, which have traditionally favoured the left, will be announced on 3 November 2023. A number of Māori electorates are finely balanced, and if more tip to Te Pāti Māori in comparison to the size of the party vote for that party, the size of Parliament will increase (known as an overhang).
A further element in the mix is the Port Waikato byelection which increases the number of seats in parliament to (at least) 121 and therefore increases the number of seats needed to form a majority. National are set to gain this seat – it has never gone to any other party, and neither Labour nor ACT are standing a candidate. Voting in the by-election closes on 25 November.
What can we expect?
Tax policies
Recent Tax Legislation
The status of key recent tax legislation will affect whether statutes will need to be repealed, or if they can be amended (or drafted afresh). All legislation sitting with the House prior to the Election, including the omnibus tax bill introduced in the May 2023 budget, has lapsed. The incoming Government will need to decide what to continue with, and where changes are made.
A summary of key statutes, what tax changes they contain, and their current status, is provided below.
There are many areas of uncertainty following the Election, and time will tell what tax changes will take place. For now, watch this space and the outcome of special votes once counted. Inland Revenue will also release a briefing to the incoming Minister of Revenue, which will outline their summary of the current tax system and suggestions for priorities going forward. A mini-budget may or may not be announced before Christmas, but in any case, there is likely to be plenty of tax changes on the table to keep the tax community busy.
If you have any queries or would like to know more about how these changes will affect you or your business, please contact your usual Deloitte advisor.
November 2023 - Tax Alerts
