The government has announced extending the bright-line test on residential property from two to five years. This change will come into effect once the Bill receives the Royal assent expected to be sometime in March 2018. Residential properties purchased before the new Bill is enacted will still be subject to the two year bright-line test.

The effect of the change is that gains from the disposal of residential land acquired and disposed of within five years will be taxable, subject to some exceptions.

The bright-line test only applies to residential land. This includes land that has a dwelling on it, land where the owner has an arrangement to build a dwelling on it, and bare land that could have a dwelling erected on it under the relevant district plan. It does not include commercial premises or farmland.

​There are exclusions to the bright-line test for a person’s main home, relationship property in certain circumstances and inheritances. A person may only have one main home and a person may not use the exclusion if they are deemed to habitually sell their main home.

The purpose of these changes is to ensure speculators pay tax on gains from property speculation as well as improve affordability for owner-occupiers by reducing demand from speculators.

On 14 December 2017, the Government introduced the Families package (Income Tax and Benefits) Bill.

The Families Package will:

• repeal the tax threshold changes, reinstate the independent earner tax credit, and repeal Working for Family tax credit changes legislated as part of the Budget 2017 Family Incomes Package
• boost incomes for low-and middle-income families by increasing payments of family tax credit, and raising the Working for Families tax credit abatement threshold.
• increase financial assistance provided to caregivers receiving Orphan's Benefit and Unsupported Child's Benefit
• introduce a Best Start tax credit to help families with costs in a child's early years 
• introduce a Winter Energy Payment to help older New Zealanders and those in receipt of a main benefit to heat their homes over winter, and 
• implement changes to Accommodation Supplement

The entire Families Package is paid for by reversing the previous Government's tax cuts.

Further Details
The legislation will come into force on the date on which it receives the Royal assent except as follows:

Income Tax Act 2007

• The Best Start tax credit comes into force on 1 July 2018.
• The Taxation (Budget Measures: Family Incomes Package) Act 2017 is repealed effective 29 May 2017 to remove the personal tax cuts in that Act, and to re-instate the independent earner tax credit (IETC)
• alteration to family tax credits, for the 2018/19 tax year will be effective 1 April 2018
• alteration to family tax credits, for the 2019/20 tax year and later will be  effective 1 April 2019

Social Security Act 1964

• The winter energy payment (WEP) comes into force on 1 July 2018. In future years the WEP will be paid from May to September. The WEP is intended to support those in receipt of a main benefit, New Zealand Superannuation or a Veteran's Pension to heat their homes in winter by increasing the amount of money available to them over the winter months. the WEP is a payment of $450 a year for single people, and $700 for couples or those with dependent children. Main benefits include Jobseeker Support, Supported Living Payment, Sole Payment Support, Youth Payment, and Young Parent Payment. Recipients can choose to opt out.

On 14/12/17 the (BPS) Budget Policy Statement was released.
Following are some of the stated policies: 

• Student allowances and living cost loans will increase by $50 a week from 1 January 2018. 
• Separate legislation has been passed to increase Paid Parental Leave, to take effect from 1 July 2018.
• Legislation will soon be introduced to ban overseas speculators from buying existing houses, and a directive has been issued to tighten criteria on purchases of rural land-Overseas Investment Amendment Bill Introduced on 14 December 2017.
• Work has begun on establishing a Housing Commission and starting the KiwiBuild programme.
• Legislation will soon be introduced to make medicinal cannabis available for people with terminal illnesses or in chronic pain.
• Contributions to the New Zealand Superannuation Fund will resume on 15 December 2017 to help safeguard the provision of universal superannuation at age 65.
• The minimum wage will increase to $16.5 an hour, to take effect from 1 April 2018, and legislation will be introduced to improve fairness in the workplace.

Fiscal strategy 
Reduce the level of net core crown debt to 20% of GDP within five years of taking office.

​With the rise in popularity of sites like AirBnB more and more people are exploring the possibilities of Bed & Breakfasts to make a bit of extra money. However they can also have serious GST and tax implications.
 
GST
A Bed and Breakfast establishment is regarded as a commercial dwelling in the eyes of the IRD; this means it falls outside the GST exemptions for residential rental properties. Therefore if it generates income in excess of $60,000 in a 12 month period the business would be required to register for GST and charge GST on its services. GST is charged at 15% for the 1st 4 weeks of accommodation and at 9% thereafter (60% of the full rate). Meals, drinks, laundry and other services provided are taxed at the full rate.

Potential Pitfall - "Watch Out"
A potential pitfall regarding GST for Bed & Breakfasts is that if the B & B breaches the $60,000 income limit and is required to register for GST. When the home is later sold that sale may also be subject to GST.  By using a company or trading trust you may be able to get around this. The property ownership must be different from the person making the taxable supply thus insulating the property and the business.
 
Tax
When calculating the income and expenditure relating to the running of a Bed & Breakfast, it is important to correctly apportion expenses between the business and personal use. A variety of factors are used in this calculation:  The number of people living in the property, area used exclusively for renting, shared area (guests & hosts), total area of the property, and the number of days the property was rented out. Expenses to be apportioned include rates, insurance, power, phone/internet, Sky TV, repairs & maintenance, and the interest portion of any mortgage payments.
 
Other expenses which can be claimed against Bed & Breakfast income include marketing and advertising, food, drinks and other consumables provided for guests.