KiwiSaver Tax Credits: What you need to know
Every year around now you will be seeing information coming out about “Member tax credits”, but what are they, and is it important?
The KiwiSaver Tax Credit Financial Year for 2018 is coming to a close on 30 June 2018 (they run 1 July to 30 June).
Each year from July to June the amount of money that everyone in NZ over 18 (and under 65) puts into KiwiSaver personally is added up. After the 30th of June each year the Government will match what you put in, up to $521.43 per year.
So, if you have not put in enough during the year you are missing out on free money! If you joined partway through the credit year, your $521.43 entitlement has been prorated based on how long you have been in KiwiSaver.
“Tax Credit” is a bad name as it actually has nothing to do with tax, you don’t need to have a job or an income, you just need to contribute enough.
Every year, I update my clients to make sure they know if they might miss out on tax credits, or to confirm that you have done enough for the full tax credits.
However not all providers will actually tell you, or if they do they are pretty vague about it.
The best way to check is to check your payslips (if you are on a salary), and multiply the amount you contribute by either 52, 26 or 12 (depending on how you get paid), and check to see if this is over $1042. If so, you have done enough. If not, you need to top up your contribution to get to $1042.86.
DUX clients get told this in May and June each year, but if you are not with us, you will need to find this out yourself.
The benefit to this is another $500 a year to your KiwiSaver, which then gets interest and adds more to your retirement. If you are saving for a home, the tax credits can be withdrawn to help with your deposit.
The MTC's may not last forever, but for now make sure you don’t miss out, and if you are not sure, get in touch and we can check for you, and make sure you never have to worry in the future.