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

 

CGT clarification shows Kiwisaver gains for lower earners

Capital Gains Tax clarification shows big gains in retirement income for lower income earners.

Clarification on the benefits of increased Member Tax Credits has led Simplicity to revise its estimates.

Simplicity interpreted the wording of the final report as meaning that a 75c tax credit for every $1 contributed would apply, up to the current maximum of $521. However this has now been clarified, and a maximum government benefit of $781.50 p.a. would apply, provided a member contributed at least $1,042 p.a.

The changes show that higher earning KiwiSaver members in growth-oriented funds are receiving less than they would have under current law. For higher-earning members in balanced funds, the benefits are minor.

The big winners from the proposed changes remain lower income KiwiSaver members eg. A member on a $40,000 salary in a growth fund would be $108,000 better off in retirement if all changes were implemented over their working life.

Please see tables showing our revised estimates with the original estimate below. Please note these figures are based on Simplicity KiwiSaver Scheme data and not industry averages.


Revised data assuming a maximum of $781.50 Member Tax Credit
.

Growth Fund
Income Employer Superannuation Contribution Tax removedPrescribed Investor Rate reduced from 17.5% to 12.5%Capital Gains Tax introducedMember tax credit increasedNet impact on total retirement savings
$40,000$33,871$65,368($34,170)$43,861$108,932
$70,000no benefitno benefit($36,876)$36,034($841)
$100,000no benefitno benefit($49,570)$36,034($13,536)

Balanced Fund
Income Employer Superannuation Contribution Tax removedPrescribed Investor Rate reduced from 17.5% to 12.5%Capital Gains Tax introducedMember tax credit increasedNet impact on total retirement savings
$40,000$25,268$40,671($18,047)$32,233$80,125
$70,000no benefitno benefit($20,406)27,713$7,307
$100,000no benefitno benefit($27,438)27,713$274


Original Estimates assuming a maximum $521 Member Tax Credit

Growth Fund

Income Employer Superannuation Contribution Tax removedPrescribed Investor Rate reduced from 17.5% to 12.5%Capital Gains Tax introducedNet impact on total retirement savings
$40,000$33,871$65,368($34,170)$65,069
$70,000no benefitno benefit($36,876)($36,876)
$100,000no benefitno benefit($49,570)($49,570)

Balanced Fund

IncomeEmployer Superannuation Contribution Tax removedPrescribed Investor Rate reduced from 17.5% to 12.5%Capital Gains Tax introducedNet impact on total retirement savings
$40,000$25,268$40,671($18,047)$47,892
$70,000no benefitno benefit($20,406)($20,406)
$100,000no benefitno benefit($27,438)($27,438)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Fuels Rushing In: Govt "Ready To Act" On Petrol Market Report

The Government will now take the Commerce Commission’s recommendations to Cabinet...
• A more transparent wholesale pricing regime • Greater contractual freedoms and fairer terms • Introducing an enforceable industry code of conduct • Improve transparency of premium grade fuel pricing... More>>

ALSO:

Reserve Bank Capital Review Decision: Increased Bank Capital Requirements

Governor Adrian Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders, and will ensure bank owners have a meaningful stake in their businesses. More>>

ALSO:

Aerospace: Christchurch Plan To Be NZ's Testbed

Christchurch aims to be at the centre of New Zealand’s burgeoning aerospace sector by 2025, according to the city’s aerospace strategic plan. More>>

ALSO:

EPA: Spill Sees Abatement Notice Served For Tamarind Taranaki

The notice was issued after a “sheen” on the sea surface was reported to regulators on Thursday 21 November, approximately 400 metres from the FPSO Umuroa. A survey commissioned by Tamarind has subsequently detected damage to the flowline connecting the Umuroa to the Tui 2H well. More>>

Taskforce Report: Changes Recommended For Winter Grazing

A Taskforce has made 11 recommendations to improve animal welfare in intensive winter grazing farm systems, the Minister of Agriculture Damien O’Connor confirmed today. More>>

ALSO: