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How does KiwiSaver work for the self-employed?


Chief Editor, Kiwi Wealth News

Written by Chief Editor, Kiwi Wealth News

Bringing you all the latest news, views and up-to-date info on KiwiSaver, retirement planning, finance and more.


24 September 2013

I will soon be working as a self-employed contractor. At the moment I am in waged employment and signed up to KiwiSaver, contributing 3% plus employer contributions. What are my obligations to KiwiSaver as a self-employed person? Does it change much?

You don't have to be an employee to be part of KiwiSaver, but the rules are a bit different.

If you will not receive PAYE income as a contractor – for example, if you are going to invoice for your contract work – your employment status will change to self-employed and you will not be required to make any contributions to your KiwiSaver account.

You can still make voluntary contributions to KiwiSaver whenever you want to – although you will need to check with your provider if there is a minimum amount to contribute.

You won't get employer contributions, but you will still be eligible for the maximum member tax credit of $521.43 from the Government provided you contribute at least $1,042.86 per KiwiSaver year and you continue to live in New Zealand.

If you are self-employed and your income is subject to PAYE deductions, you will be considered an employee for the purposes of KiwiSaver.

This means the KiwiSaver contributions minimum of 3% will continue to be deducted from your gross salary or wage, and you must also make the minimum employer's contribution of 3%.

If that is not what you want to do, provided you have been a KiwiSaver member for at least one year, you could consider taking a 'contributions holiday', where any contributions are made by you voluntarily and you would not be required to make employer contributions. You can take a contributions holiday of between three months and five years. There's no limit to the number of times you can take a contributions holiday.

The information provided above is stated accurately to the best of our knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. You should seek financial advice specific to your personal circumstances from an Authorised Financial Adviser before making any investment decision.


Related information

KiwiSaver membership options

Inland Revenue webpage on contributions holidays

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Tags: KiwiSaver

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