Factbox: How tomorrow's tax changes could affect you

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The most significant tax reforms in almost a quarter of a century take effect from tomorrow.

Income tax cuts are across the board and will be implemented alongside an increase in GST from 12.5 to 15 per cent.

Find out how the changes might affect you:

* Regular payments, like gym memberships or car parking, are likely to increase with GST. The GST Act allows a supplier to increase their prices on existing contracts to compensate for the associated increase in GST, eg, a $20 a week gym membership will rise to $20.45.

* If you have an item on lay-by, paying it off before October 1 can save you the increase in GST. The amount of GST paid on a lay-by purchase depends on when the final payment is made, which is when you take ownership of the item. If the final payment is made before October 1, GST will be charged at 12.5 percent, but after that it will be charged at 15 percent.

* Hire purchase agreements work in the opposite way - ownership is taken over when the purchase agreement is signed, not when the item is paid off in full. If you sign a hire purchase agreement before October 1 you'll be charged GST at 12.5 percent for the duration of the agreement, but if you sign after then you will be charged GST at 15 percent.

* There may be a time-lag between the increase in GST and when tax cuts come through in pay cheques. If you are paid monthly you will not feel the effects of the tax cuts until your next pay cheque. Depending on when you get paid, that could be four weeks away, but you will feel the increase in GST from October 1.

Households:

* A single person paying $150 a week in shared accommodation and earning a salary of $38,000 will have $20.19 extra in their bank account each week. They are also likely to be spending around $9.55 extra in GST over the same period, making them $10.64 per week better off. Over a year that equates to $553.28.

* A young couple in their mid-20s renting a flat for $300 a week will not be affected by the GST increase in terms of the rent. If one earns $32,000 and the other $35,000, they will collectively have an extra $37.02 a week after the tax cut and pay around $17.41 more weekly in GST. That leaves them with $19.61 extra per week, or $1019.72 over a year.

* A couple in their 40s with two children making mortgage payments of $500 a week. One works full-time and earns $80,000, while the other works part-time to look after the children and earns $30,000. They will have an extra $66.73 a week after the tax cut and pay around $25.41 more weekly in GST, leaving them with $41.32 extra per week, or $2148.64 over a year.

* A couple in their early 50s who are mortgage-free, one earning $100,000 and the other $110,000, will get an extra $149.23 a week after the tax cut, and pay around $64.57 more in GST on average, leaving them $84.66 extra a week or $4402.32 a year better off.

* A mortgage-free, retired married couple in their 60s living exclusively off their super and savings and with no other income will get $21.68 more per week in superannuation to compensate them for the GST increases. They are also likely to spend $10.87 a week in GST payments, leaving them about $10.81 a week or $562.12 a year better off.

* Information sourced from Retirement Commission website sorted.org.nz

- NZPA