Photo: 123RF
The first day of April marks the start of a new tax year - and the first full year of the new tax thresholds.
But there is a warning that the way tax changes were applied last year might mean more people get a bill - or refund - in the coming months.
In the year to 31 March, there were eight tax thresholds in play, reflecting the fact that the government's tax threshold adjustment took effect on 31 July, making it a "composite" tax year.
Income to $14,000 was taxed at 10.5 percent, income between $14,001 and $15,600 at 12.82 percent, income between $15,601 and $48,000 at 17.5 percent, income between $48,001 and $53,500 at 21.64 percent, income between $53,501 and $70,000 at 30 percent, income between $70,001 and $78,100 at 30.99 percent, income between $78,101 and $180,000 at 33 percent and income above $180,001 at 39 percent.
"There were four months of the year at the old thresholds and eight months at the new thresholds," Robyn Walker, a tax partner at Deloitte said.
"That's where you get the eight composite tax rates for that year."
She said the mid-year tax changes meant there could be more issues in this year's tax returns and automatic calculations from Inland Revenue.
"If someone hasn't earned income evenly through the year there might be more overs and unders," she said.
"PAYE tables should have been updated to the new threshold from July 31 but when you're calculating for the entire year, that's when you use the eight composite rates.
"If you earned more income in those first four months and less in later months you might have been overtaxed because more of your income would have been when the higher thresholds applied, and vice versa.
"If you only started working in the second half of the year, maybe you were a student, the tax would have been withheld at the new threshold and the calculation will assume you earned it evenly over the entire year. That's where you might have shortfalls."
She said the amounts overpaid or underpaid were likely to be relatively small. Threshold adjustments had delivered up to about $20 a week in savings.
If there were no other problems with a person's tax return, any amount owing might be written off.
The threshold changes have other flow-on effects. Fringe benefit alternate tax thresholds change from 1 April - these thresholds are calculated with reference to personal tax thresholds, meaning there are 5 different rates which span from 11.73 percent to 63.93 percent and apply based on total all-inclusive after-tax pay.
Employer superannuation contribution tax (ESCT) thresholds also shift. This ranges from 10.5 percent up to $18,720 through to 39 percent above $216,001.
Walker said if people were doing mileage claims, they should also take an odometer reading on 1 April.
That's not all…
Other changes also take effect from 1 April.
The minimum wage rises to $23.50. The 1.5 percent increase is less than the Ministry of Business, innovation and Employment had recommended.
Benefit rates will also increase. A single person getting JobSeeker support who is over 25 will get $361.32 a week after tax. A couple will get $307.42 each. A sole parent with children will receive $505.80.
Power bills will also lift. New limits apply to how much Transport and local lines companies can charge from April 1, which is expected to add $10 a month on average to household power bills. The Commerce Commission says average increase to household electricity bills will be different depending on where you live. Some regions will see average initial increases of around $10 excluding GST, while others will see average increases of $25 per month.
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