Member Tax Credits and Budget 2011

I currently contribute 2% of my salary to KiwiSaver and receive the maximum tax credits each year. My employer does not match my contribution because I have a longerstanding Superannuation scheme to which they already contribute more than the current 2% or future 3%. If I continue to contribute the 2% to KiwiSaver I assume I will receive half the tax credits I receive now?

Two retirement savings schemes huh? Good on ya and having those above average contributions from your employer is a bonus. With respect to your separate KiwiSaver plan, you are correct in your assessment about your member tax credits being reduced from their present value by 50%. Currently, if you're making those $20 a week payments from your pay packet, Government is matching them dollar for dollar up to a maxiumum of $1,043 a year. That will change next month as a result of National's changes to KiwiSaver announced as part of Budget 2011. While you won't actually receive the member tax credit for a full year, the reduced payments will begin to be calculated on a $10 a week maximum basis effective July 1.

You asked a similar question about contributions you are making on behalf of a relative who is on an invalid's benefit. Wish I could say you'd be rewarded for that gesture with some kind of bonus points from Government but the member tax credits are essentially the same as what I've described above. So if you continue to make the maximum payments there, Government will meet you half way now, at $521 maximum per year starting next month.

Save and prosper.

 

 

 

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