Article from Sorted.org.nz
The tax cuts and increase in GST are here, and everyone is affected but in different ways. So it’s important to look at your household budget to work out how much extra you’ll have and how you’ll spend it.
October 1 saw all salary and wage earners receive a tax cut and GST rose 2.5% to 15%. NZ Super and many benefits and allowances also increased.
Everyone’s situation is different according to their income, so Kiwis need to reassess their budgets to work out exactly how they will be affected.
For example, a single person paying $150 a week in rent with a salary of $36,000 will have an extra $20 per week after the tax cut. They will pay more than $9.50 a week in additional GST leaving them with an extra $10.60 each week.
Over a year that’s more than $500. If they’re already managing within their existing budget, then this extra money could be put towards paying off credit card debt, put into KiwiSaver or a savings account.
By comparison a family of four, with weekly mortgage payments of $500 and where one parent earns $80,000 and the other earns $30,000, will have an extra $66 a week after the tax cut. They will pay around $25 more each week in GST, leaving them with $41 extra. Over the course of a year they will be $2,148 better off.
These examples show you that the impact the tax cuts will have varies greatly depending on different household budgets.
The increase in GST may seem small at 2.5% but it’s worth thinking about. What may seem like small increases can add up. And it’s important to think about all financial commitments – hire purchase payments, lay-bys and gym memberships can be easily overlooked.
Sorted.org.nz has a Budget calculator
that makes working out your new budget easy.
Sorted is New Zealand's free independent online money guide, run by the Retirement Commission. Sorted has a range of free calculators to help you make financial decisions at www.sorted.org.nz/calculators.
|Article provided by Sorted.org.nz. To find out more, visit the Retirement Commission website www.sorted.org.nz your independent money guide. It's packed with free information, tools and calculators to help you plan for retirement and manage money throughout your life.|