9 Jun 2015

Despite Budget forecast, books in surplus

11:11 am on 9 June 2015

Just two weeks after the Budget forecast a deficit the Government has recorded a surplus for the 10 months to the end of April of $448 million.

In the Budget the Treasury had forecast a deficit, once investment gains and losses had been excluded, of $555 million for that period.

But while today's financial statements for the first 10 months of the financial year are much better than expected, the Treasury said it was too early to tell whether the end-of-year financial position would also be more positive.

It said the the figures for the period to the end of April were better because the Government's tax take was $437 million stronger than anticipated.

Both income from corporate tax and GST were higher, with core Crown tax totalling $55 billion.

Treasury said corporate tax was up $190 million, mainly because of increased payments of Portfolio Investment Entity tax.

This mainly applies to investment and savings companies which, according to Inland Revenue, elect to pay tax on their investment income based on the prescribed tax rate of their investors rather than at each company's tax rate.

In the financial statements for the ten months the Treasury said because April was the last significant month for PIE tax to be paid the better-than-expected return could flow through to the end of the financial year.

It said it was less sure whether GST income would continue to be stronger than forecast.

Meanwhile, core Crown spending was also $420 million lower than expected at $59.8 million.

The lower spending was spread across a number of departments but the largest related to a $164 million lower-than-expected spend on education.

The Treasury said some of the lower spending was due to a delay in money being spent but some of that could persist to the end of the year.

In total the Government spent $77.7 billion during the 10 months to the end of April, while earning $78.5 billion in tax and other income.

At April 30 its assets were valued at $267.8 billion, its liabilities were $186.4 billion and its net worth was $76.2 billion.