In a recent survey of KiwiSaver members almost half had no idea they could claim up to an extra $521.43 from the government every year - through a type of KiwiSaver contribution known as member tax credits.
Alarmed that New Zealanders aren’t reaping their full benefits, Kiwi Wealth has created an easy-to-follow video which explains just how simple the process can be for eligible members.
It’s essentially free money and is much easier to claim than you might think. Kiwi Wealth Marketing Executive, Nathan Barker explains:
Hi Nathan. What’s this video about?
It explains what member tax credits (or MTCs) are, what you need to do to get them and what eligibility criteria you need to meet.
Why did you make it?
Member tax credits are a great benefit for anyone who’s a member of a KiwiSaver scheme. Lots of people often miss out because they don’t understand what they are or know how to get them! So, I wanted to make a video to explain how they work and how KiwiSaver members can take advantage of them.
What exactly is a Member Tax Credit, and why should I care?
A member tax credit is the annual contribution the government gives you for simply contributing to your KiwiSaver account. The government will give you 50c for every dollar you contribute, up to a maximum of $521.43. MTCs are essentially a reward from the government for being a good saver.
It’s free money on top of your contributions - just imagine the difference an extra $521.43 could make to your retirement over years of savings!
Am I eligible?
To be eligible you need to be a contributing member of a KiwiSaver scheme, over the age of 18, live mainly in New Zealand and not be eligible for a retirement withdrawal.
Free money sounds great! What do I have to do to get it?
Just make sure you’ve contributed $1042.86 before 30 June each year and your KiwiSaver scheme provider will take care of the rest for you. It’s really that simple!
(Note: Employer contributions, government contributions and amounts transferred from Australia under the Trans-Tasman retirement savings portability do not count towards eligibility for the member tax credit).
Have I left it too late?
It’s never too late! If you find yourself in a position where you have spare money you can easily invest it in your KiwiSaver account to get at least some of the member tax credit. You don’t have to put the full amount in – even if you put just $100 in the government will give you $50.
Just remember, any additional voluntary contributions you make will generally be locked in until you are eligible to make a final withdrawal from your KiwiSaver account (and subject to investment risks and potential loss in value), so make sure you can afford to make them.
Is it complicated?
Not at all – if eligible, all you have to do is contribute to your KiwiSaver account and depending on how much you contribute you’ll get all or some of the member tax credit. If you don’t contribute, you won’t get anything – simple.
And I can get this every year?
Yes – which is why it’s an amazing benefit. Every single year you can get up to a maximum of $521.43 extra on top of your contributions. It might not be around forever so make hay whilst the sun shines (as they may be removed in the future)
Anything else I should know about it?
One thing that often stumps people is that if they join a KiwiSaver scheme in March, for example, and think they can get the maximum amount – unfortunately, you can’t.
If you join part way through the year, then your MTC is worked out based on the number of days you’re a member during that year (remember in the MTC world a year runs from 1 July – 30 June). The same applies if you turn 18 during the year – your MTC is worked out based on the number of days during the year in which you’re 18.
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