member tax credits
Q) Our son was 18 at the beginning of December which means he will be eligible for 7/12 of the member tax credit (MTC) as the year goes to June 30, 2012. Is the tax credit still $20 a week for this year or is it already $10? How much does he have to contribute to get 7/12 of the maximum? He has some part-time work while studying and we will top up his account so he gets the most he can. Is it 7/2 of $1040?
A) You've raised a good question. I confirmed with Inland Revenue that member tax credits are indeed tied to your son's birth date, so regardless of how much you pay into the pot, their share will be limited to the number of days he's in enrolled in KiwiSaver since turning 18 within their tax calender year. So yes, effectively he will be eligible for 7/12 of the maximum of MTC of $521 which works out to just over $300 a day. The reduced tax credits took effect from July 1, 2011, so they pay-outs are already maxing out at $10 a week. To ensure your son gets the maximum from Government, he'll have to pay $20 a week. If he wants to find out how much he's paid into the scheme, he can track his contributions on Inland Revenue's website on the My KiwiSaver section. Here's the link.
He'll need to be registered on Inland Revenue's website, which he can do here.
The rules are also explained on IRD's website here.