🖐️ 5 Proposed Changes To KiwiSaver And Income Tax Rates
In the latest news, NZ government is proposing a Bill for a few tax changes which are yet to be passed or are currently under discussion. While most of what the Bill introduces or changes will not affect individuals directly, we pulled out the ones that may do so.
The changes in this proposed Bill include the following:
1. Maximum KiwiSaver Contributions Slashed To 1 Year
The current maximum KiwiSaver contributions holiday period will be cut from 5 years to 1 year so Kiwis can cash-out earlier if necessary. As per the Bill, it will be called "Savings Suspension". We're not quite sure yet if this will be an add-on feature, or a complete rehaul on KiwiSaver altogether.
2. KiwiSaver Will Be Open For All 60-year-olds And Above
Older folks will be allowed to join as a provider of low cost managed funds. This means the current lock-in period for members who joined the scheme after the age of 60 will be removed. Employers don't have to fret as it will not be mandatory for them to contribute, but they can do so voluntarily.
3. KiwiSaver Contribution Rates Will Also Have 6% & 10%
In addition to the current KiwiSaver rates of 3, 4 and 8 percent, rates of 6 and 10 percent will also be included as additional options. These options came about after the review of the Retirement Commissioner’s December 2016 retirement income policies.
4. Remove The Need To File Personal Tax Summary (PTS)
Filing a Personal Tax Summary (PTS) will be a thing of the past if the proposed Bill comes through. Taxpayers will be grouped by IRD according to the income information and automatically calculate tax refunds due.
5. Fewer People To Pay Secondary Tax
Exciting times for those paying secondary tax on their income as the Bill also seeks to re-evaluate the way people pay secondary rate of tax and getting a refund. They will instead have to only pay a tailored tax rate from the outset.
The reason for these proposed changes is because every year, around 750,000 people miss out on their tax refunds. If this Bill is passed, the impact for this change will return about $150 million to Kiwis, both from refunds due and current PTS.
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Tell us what you think of these proposed changes in the comments below.