• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook

Poll: If the Govt $1040 Tax Break goes in the budget would you still contribute to Kiwisave

Page 1 of 37 1 2 3 11 ... LastLast
Results 1 to 10 of 361
  1. #1
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,850

    Default Kiwisaver & Tax

    The blurb goes, in part:
    Kiwisaver
    * A voluntary saving scheme for people aged 18 to 65 in full-time
    and part-time work.
    * Employees choose to save 4 or 8 per cent of gross pay.
    Does anyone know if the 4 or 8% of gross is a tax-free contribution?

  2. #2
    Join Date
    Jan 2004
    Location
    Whangarei
    Posts
    5,867

    Default

    Either way, property prices will jump a little when people start using it to buy their first homes

  3. #3
    Join Date
    Jun 2005
    Location
    Wellington
    Posts
    1,112

    Default

    No it will still be taxable income, though earnings sacrificed directly to approved super-schemes are usually taxed at a lower marginal rate. Assuming the contributer is earning above $60K p.a. the 4-8% contribution should then be taxed at 33% instead of 39%.

  4. #4
    Join Date
    Jun 2005
    Location
    Wellington
    Posts
    1,112

    Default

    Dave, I wouldn't expect there to be much of a jump at all. The contribution will only be around $1,000 per year and is intended to be structured so that up to 30,000 households will qualify for it (read-lowest income earning households).

  5. #5
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,850

    Default Re-election Gimmickery

    I've looked at lots of Media Releases and various forms
    of analysis and none of them even suggest that contributions
    will be tax exempt.

    My view is simple:
    If the socialists were serious, they would tax exempt any contributions
    as well as waive any RWT interest/dividend, thereby encouraging
    savings. The fees subsidy and $1k "top-up" are - IMNSHO -
    charitably described as re-election gimmicks.

    Once there's any draw upon such savings "accounts," the gov't
    of the day would be getting GST, at the very least.

    I HATE socialism and socialists!!!

  6. #6
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,086

    Default

    I agree - the contributions should be tax free.

    I haven't seen/heard much about this yet, but is there any mention of the return on the savings?

    cube
    DFTBA

  7. #7
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    3,936

    Default

    I think this is basically a poor effort on the governments behalf. They are dreaming if they think 25% of people will use it like they quote.
    Why would a worker save this way? There is no incentive at all. No tax breaks etc..
    Why would a company encourage workers to use it? Increased admin and overheads and no tax break. Infact if they make contributions towards it for the worker would they not be liable for Fringe benefit tax also.

    It is a shame Winston's attempt years ago never worked out. Look at Oz and how well theres has taken off now..

  8. #8
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,850

    Default Rewards

    Quote Originally Posted by whitt
    I think this is basically a poor effort on the governments behalf. They are dreaming if they think 25% of people will use it like they quote.
    Why would a worker save this way? <snipped>
    For some perverse reason, it seems that governments most
    everywhere become ensnared in the fallacious construct of
    rewarding bad behaviour and penalising good behaviour.

    I'm not sure what that tells us, but it tells me that they are
    simply inept and totally unsuited to running a fish 'n' chip shop,
    let alone a country.

  9. #9
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    Quote Originally Posted by whitt
    I think this is basically a poor effort on the governments behalf. They are dreaming if they think 25% of people will use it like they quote.
    The idea is people want to save but are just to lazy so an opt out scheme rather than an opt in scheme might work.
    Why would a worker save this way? There is no incentive at all. No tax breaks etc..
    see above. Remember most investors are activ investors (ie, have managed funds)
    Why would a company encourage workers to use it? Increased admin and overheads and no tax break.
    It is all administered by the IRD. All they have to do is provide a pamplet supplied by IRD and use a different pay rate when doing PAYE forms so not that much of a major for the employer.
    Infact if they make contributions towards it for the worker would they not be liable for Fringe benefit tax also.
    employees are not expected to make a contribution to the amount - the goverment are giving everyone a jump start (of $1,000).
    It is a shame Winston's attempt years ago never worked out. Look at Oz and how well theres has taken off now..
    We digress.

    Other points:

    Admin costs of the fund will be born in part by the goverment. I dont think this has been detailed but one of the main disadvantages of a managed fund is the fees but if the govt are paying, good for the invest (note. High fees is why Mary holmes recommends low fee index funds. Direct investment is even cheaper).

    Returns will not be guaranteed but will be what ever the fund returns. I am guessing but the funds will be very similar to those retime funds offered by Tower/ANZ/ASB/.... In fact they may be the very same funds.

    My only issue with it is the distortion effect. if you already own a home yiou cant get the first home buyers grant (it isn't but essentuall is) of up to $5,000. People setting up a business cant draw down on it but they cound buy a house instead.

    I am already planning when my first house will be in 5 years time (to qualify for maximum governement subsidy). Until then, any purchases will be in company or trust name.

  10. #10

    Default

    Quote Originally Posted by CJ
    I am already planning when my first house will be in 5 years time (to qualify for maximum governement subsidy). Until then, any purchases will be in company or trust name.
    So far, I only have one (investment) property and its under a company name. - I still live in my dad's house . So, if I join this scheme, can I still get the first home buyers grant ? Or I am out of this scheme since I already "own" a property?


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. A Kiwisaver story..
    By Shalodge in forum General (NZ)
    Replies: 31
    Last Post: 03-04-2017, 12:59 PM
  2. To use kiwisaver or not
    By Nectar in forum Finance, legal and tax (NZ)
    Replies: 16
    Last Post: 05-01-2017, 12:36 AM
  3. kiwisaver for non-resident
    By tarderob in forum General (NZ)
    Replies: 2
    Last Post: 16-10-2016, 04:00 PM
  4. First home buyers get boost with KiwiSaver changes
    By Judge in forum Property Investment (NZ)
    Replies: 2
    Last Post: 31-07-2016, 06:28 PM
  5. First home in NZ using KiwiSaver
    By motoman in forum General (NZ)
    Replies: 9
    Last Post: 14-12-2015, 08:10 AM
  6. Replies: 6
    Last Post: 26-09-2015, 12:51 PM
  7. If we treat the asset sales like Kiwisaver.....
    By donna in forum Finance, legal and tax (NZ)
    Replies: 3
    Last Post: 13-02-2012, 06:51 AM
  8. Kiwisaver 30th June reminder
    By speights boy in forum Finance, legal and tax (NZ)
    Replies: 1
    Last Post: 27-06-2011, 11:37 AM
  9. First Home Buyer Subsidy- Kiwisaver
    By ENP in forum Property Investment (NZ)
    Replies: 13
    Last Post: 03-11-2010, 10:09 PM

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •