IPs in a private super scheme

[sidinz]

I've never heard of this before.

Anyone know how they work?

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11154765

[FlyingKiwi]

Didn't know you could do it in NZ - property owned in "SMSFs" (self-managed super funds) is gaining popularity in Australia but the rules stipulate that the property must be an investment and cannot be lived in by yourself or another family member which seems fair to me.

[Glizzle]

Any MP with houses as Investments should not be allowed access to the Accommodation allowance. Its just double dipping.

[sidinz]

Any MP with houses as Investments should not be allowed access to the Accommodation allowance. Its just double dipping.

And if they were to rent that IP out to a third party and then rent themselves another place to live in, using the allowance, the net difference would be....?

[Glizzle]

Its about conflicts of interests, especially when we have a housing issue with prices.

[TheLibrary]

MPs should not be exclusively excluded from doing something as any part of a solution to house prices.

[sidinz]

I imagine Simon Bridges' thoughts went something like this: "Well, I could keep renting a hotel room, putting profits into the hotel-owning corporation's pockets, or I could buy a wee apartment that would become an investment when I'm no longer an MP."
Doesn't make any difference to the taxpayer which one he goes for.
I would imagine in his position, I'd do the same thing. Much nicer having your own space than an anonymous hotel room where you live out of a suitcase.

[speights boy]

I admit I don't fully understand the situation, but on a quick read in my mind it is not the fact around the MPs being allowed to use their allowance for their own properties.

It is more:
1. Why are they allowed to have this allowance payment added to by their generous superannuation scheme under this rule ?
2. Why are they specifically told not to disclose it by the registrar when some have tried to do so ?

[sidinz]

I think the super scheme is a red herring. Whole different perk that the paper's dredging up. I admit that the 'matching +' contributions are pretty generous, when other govt employees don't get that much. Especially added to the other perks they get. But that's a whole other argument.

What the paper's doing, is pointing out that by having the super payments going into the property fund instead of Kiwisaver (for example), more taxpayer $ are going towards paying off the recipients' mortgages. It's just that for most MPs, the accommodation allowance and the super contributions would be going to different destinations, but for these MPs, they go to the same place. The IP.

So what?

Contributions are contributions, whether they go into the property fund or another super scheme, it costs the taxpayer the same. Hell, I'd love to pay some mortgage off with Kiwisaver $.

Their maths is faulty, too. That $78K they are bandying about includes the MPs' own super contributions.

[speights boy]

Contributions are contributions, whether they go into the property fund or another super scheme, it costs the taxpayer the same.
Hell, I'd love to pay some mortgage off with Kiwisaver $.

Except I think you will find the effective tax rate on most Kiwisaver funds is a lot higher than on a mortgaged IP.

[sidinz]

Probably true. But there's talk about changing that, too!

[speights boy]

Their maths is faulty, too. That $78K they are bandying about includes the MPs' own super contributions.

Their maths seems spot on.
Sure, in order to receive the total of $77,988 they have to contribute $11,568 of their own money.
(About 85% taxpayer funded)

I think it is most definitely the perceived inequalities compared to the average voters' super schemes that generates the comments.
Especially with the general debate around tax and different types of investments including Kiwisaver.

[TheLibrary]

Yes, change the rules around what has to be disclosed etc, and what tax structures are allowable or not etc, but anyone who has a job and as part of that job gets accommodation paid or subsidised, should still be allowed to have investment properties.

[speights boy]

Probably true. But there's talk about changing that, too!

Not from the Government side, but from a savings industry lobby group.

Even more reason that Government MPs should be seen not to have any perceived conflict of interest.

In cases such as this, perception counts.

[speights boy]

Yes, change the rules around what has to be disclosed etc, and what tax structures are allowable or not etc, but anyone who has a job and as part of that job gets accommodation paid or subsidised, should still be allowed to have investment properties.

But not an IP in a taxpayer subsidised superannuation scheme, unless that option is allowed for everyone, as in Australia.