Increase to the top tax rate for individual taxpayers
December 8, 2020
The Government is expected to increase the top tax rate for individual taxpayers to 39% on income over $180,000. Labour campaigned on this and the Government is expected to introduce Legislation into Parliament before the end of the calendar year. The change would come into effect from 1 April 2021.
The effect of the change is a 6% increase on income over $180,000. At present that income is taxed at 33%. For every $10,000 over the threshold, the additional taxation incurred would be $600. So if you earned $225,000 per annum, your additional tax in 2021/2022 is $2,700.
The legislation will also undoubtedly include anti-avoidance provisions for shielding that income in other structures or entities. Nevertheless even when these provisions are introduced, it would still be worthwhile to review your situation to minimise the impact of the tax increase.
There is no change anticipated to income taxation on amounts less than $180,000, including changes to tax brackets, rate changes or exemptions.
Get in touch with us to discuss ways in which you can minimise the impact of this increase.
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