Member tax credits aren’t about tax. It’s money that the government adds to your KiwiSaver account. This money is easy to get – automatic, in many cases – and worth knowing about. Here’s our single-cup-of-coffee run through.
The government gives you money!
If you put enough money into your KiwiSaver account, the government will add money each year as well. Instead of ‘member tax credit’, think of it as the ‘annual government contribution’.
There’s over $500 in it for you each year – that’s free money!
For every dollar you put into your KiwiSaver account, the government will put in 50 cents, up to a maximum of $521.43 per year. So to get the full contribution you have to put in at least $1,042.86 a year (and meet all eligibility requirements for the full annual period). But if you were to put in, say, $400 a year, the government would only put in $200. Amounts contributed by your employer are not counted when determining whether you can get the full contribution.
By the way, the annual period runs from 1 July to 30 June.
You can top up your account to get the full contribution
Money deducted from your pay, or money you deposit into your KiwiSaver account directly, all counts. If the money deducted from your pay is less than $1,042.86, and you want the full annual government contribution, then you can top up your account with voluntary payments.
Most people are eligible
You’re eligible for member tax credits if you’re:
- 18 years or older;
- a member of a KiwiSaver scheme;
- residing mainly in New Zealand (or otherwise an employee of the State services serving outside New Zealand or working overseas as a volunteer or for token payment for certain charitable organisations and you perform certain work for the charitable organisation); and
- not yet eligible to withdraw from KiwiSaver - in most cases if you’re under 65, or if you’re over 65 and have been a KiwiSaver member for more than five years.
Setup is simple
If you’re eligible, all you have to do is put money into your KiwiSaver account. This can either be the money that gets deducted from your pay, or voluntary payments. You have to make sure the money is deposited, by 30 June each year. So don’t leave it till the last minute!
Your KiwiSaver provider will claim the money from the government for you each year, usually in July. Assuming there are no delays, you should see the money show up in your KiwiSaver account within a month after that.
This article reflects the personal views of the author at the date shown above. The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your personal circumstances from an Authorised Financial Adviser before making any investment decisions.