Budget closes livestock loophole

As expected, the Budget will cut the amount of tax deductions available for mixed-use assets such as holiday homes, boats and aircraft.

Also as flagged, a loophole allowing farmers to cut their tax bill by switching livestock valuation methods from year to year will be closed.

The measure was announced in March but will now be enshrined in legislation.

Revenue Minister Peter Dunne said the previous rules were too loose and allowed farmers switching from the "herd scheme" to the "national standard cost scheme" to receive an "unfair tax advantage".

The change will plug an estimated revenue "leakage" of $184m over four years.

Other key points include:

* Closing a tax loophole for those who rent out their bach and boat, saving $109m over four years

* An excise tax hike on tobacco, taking the price of a pack of 20 cigarettes to more than $20 by 2016

* Scrapping the annual inflationary increase to early education funding

* Deferring KiwiSaver auto enrolment

* New KiwiSaver rules requiring more disclosure from fund managers.

* Increasing student loan repayment rate to 12 per cent

* Increasing cost of prescription items to $5 each

* 154,000 new jobs over the next four years, unemployment to below 5 per cent by 2015

* Government debt to rise from $50b to more than $70b before return to surplus

* A return to surplus by 2014/15 (of $197m)

* New spending totals $26.5m to 2015/16

* Reprioritising $4.4b of spending

* Holiday home tax deductions cut, saving $109 million over four years

* Livestock valuation rules tightened, saving $184 million over four years

* Three tax credits abolished, saving $117 million over four years.

* Extra $78.4m funding for IRD audit and compliance.

* Future Investment Fund established to use proceeds of SOE selldowns