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Mooted Tax Changes Sensible

29 September 2006

Mooted Tax Changes Sensible

The Institute of Chartered Accountants is welcoming reports that the government is finally listening to expert advice on employer superannuation tax schemes.

The Institute has previously expressed its concern at proposed concessionary tax treatments for contributions to KiwiSaver funds. The changes made as part of the Kiwisaver scheme proposed tax-free employer contributions to KiwiSaver schemes of up to 4% of an employee's salary, provided the employee matches the contribution. For all other schemes, employers have to deduct a withholding tax.

We believe that encouraging people to divert their savings into a particular savings product because it provides a tax concession is not desirable. We are therefore pleased that Government is reviewing the policy with a view to aligning the tax treatment of contributions to other superannuation schemes.

The bigger picture questions still remain; that is, do you need to subsidise savings at all and if you do, why prefer superannuation schemes over other savings vehicles? The Institute is bringing together New Zealand's leading tax experts at the Institute's 14th Annual Tax conference in Christchurch next week. We expect robust debate on this and other topical issues.

ENDS

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