Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Tax breaks for superannuation contributions


Tax breaks for superannuation contributions


In the spirit of Christmas and goodwill to taxpayers the Government has moved to create a level playing field between Kiwi Saver and approved superannuation schemes.

While this has been expected the industry and employees will be relieved this has been confirmed rather than the subject of speculation, says Ernst & Young Tax Director Jo Doolan.

“With tax breaks already announced for contributions to Kiwi Saver schemes the fear was people would withdraw funds from their existing schemes to chase the tax breaks,” says Jo.

“History shows the money tends to get spent rather than reinvested and this factor together with the potential negative impact on the saving industry would have been detrimental to the savings culture the Government is desperately trying to encourage.

“After coming out and publicly bagging those who were exploiting the existing rules by getting into excessive salary sacrificing, without defining what this really meant, these changes provides certainty,” she says.

The tax free contribution will be the lesser of the employee’s contributions or 4% of the employee’s salary and wages.

In a case of read the fine print this means if an employee contributes 4% of their salary to an approved super fund then their employer can also contribute 4% without incurring a tax charge.

If the employee contributes 3% and the employer 4% then 1% of the employer’s contribution will be subject to tax.

Jo says that while on an individual basis the tax savings may not be great, the cost to the Government is estimated as $17 million in the first year of 2007/08 increasing to $19 million in 2009/10.

“These changes are welcomed but it is highly likely self-employed people will be banging the discrimination drum or throwing their toys out of the cot. They miss out unless they restructure their businesses to operate via a company and become employees.

“The other rain cloud that could also result from these proposals is unions demanding employers fund both superannuation savings and pay increases.”

Ends


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Mycoplasma Bovis: More Properties Positive

One of the latest infected properties is in the Hastings district, the other three are within a farming enterprise in Winton. The suspect property is near Ashburton. More>>

ALSO:

Manawatū Gorge Alternative: More Work Needed To Choose Route

“We are currently working closely and in partnership with local councils and other stakeholders to make the right long-term decision. It’s vital we have strong support on the new route as it will represent a very significant long-term investment and it will need to serve the region and the country for decades to come.” More>>

ALSO:

RBNZ: Super Fund Chief To Be New Reserve Bank Governor

Adrian Orr has been appointed as Reserve Bank Governor effective from 27 March 2018, Finance Minister Grant Robertson says. More>>

ALSO:

ScoopPro: Helping PR Professionals Get More Out Of Scoop

Scoop.co.nz has been a fixture of New Zealand’s news and Public Relations infrastructure for over 18 years. However, without the financial assistance of those using Scoop in a professional context in key sectors such as Public Relations and media, Scoop will not be able to continue this service... More>>

Insurance: 2017 Worst Year On Record For Weather-Related Losses

The Insurance Council of New Zealand (ICNZ) announced today that 2017 has been the most expensive year on record for weather-related losses, with a total insured-losses value of more than $242 million. More>>

ALSO: