Tax rules will be tightened around high income earners who rent out assets for some of the year such as holiday homes and yachts, Finance Minister Bill English indicated this morning.

The move to tighten the law regarding "mixed use assets" was foreshadowed in last year's budget.

it is not clear in tax rules whether the owners can claim tax deductions for some expenditure relating to the time when the asset is not in use at all.

"We continue to focus on improving fairness in the tax system so that people who should be paying tax are paying tax - not finding ways around it - and keeping a broad tax base so that we can keep the rates relatively low.


"We have no big steps but we continue each year to patch some holes, improve fairness, keep the revenue base broad."

There was a change on January 1 closing loopholes that allowed people to minimise their income to qualify for student allowances and working for families.

"That has already been tightened up and in the Budget there will be a few more tax measures that tighten up where we believe people are avoiding their obligations and that will be focused mainly on high-income earners."

The changes would be around issues that had already been discussed over the last 12 months.

"There's no deep dark secrets there."

Commenting on the launch today of a "living wage campaign" by unions and social service groups, Mr English said he was not sure what was meant by a living wage but "of course we want to see higher incomes across the board."

"To achieve that we need a flexible, resilient and growing economy."

"You can't just invent higher wages. You can't just go and borrow them off someone or legislate them. You've got to earn them and I think most New Zealander understand that."


The theme of tomorrow's budget is "confidence is uncertain times," Mr English told reporters at the Petone printing firm where the Budget has been printed.

"Things haven't all gone New Zealand's way but the Budget shows the Government's confidence in getting its own books in order but also in being able to support a growing economy that generates more jobs and better incomes."

The Budget, Mr English's fourth, will forecast a surplus in the 2014 - 15 year.