Whether you’re planning on using KiwiSaver towards retirement, a first home – or both- finding ways to boost that savings balance will certainly help you along the way. And there is one really simple way to get some extra cash that you could miss out on if you’re not aware.
In this Canstar guide, we’ll talk about KiwiSaver Government contributions, how much you’re entitled to and what you need to do to make sure you get the full amount.
KiwiSaver Government contributions: How does it work?
If you’re contributing to your KiwiSaver scheme and are between 18 and 64 years old (or older if you have been a member of KiwiSaver for less than five years), then you’re entitled to a member tax credit from the government. The maximum annual member tax credit you are entitled to is $521.43 per year. To get the full member tax credit automatically, you have to personally contribute at least $1,042.86 a year, from 1 July to 30 June.
The good news is that you can make some additional payments to your KiwiSaver account to make sure that you receive the full KiwiSaver Government contribution. So, if you contribute less than $1,042.86 from your pay, you can make voluntary contributions so that you receive the full member tax credit payment from the Government.
If you join KiwiSaver part way through the annual period (1 July to 30 June), you’ll receive a member tax credit based on the number of days in the year that you’ve been a KiwiSaver member. When you turn 18, you’ll receive a member tax credit for the number of days in the year (1 July to 30 June) that you are 18.
What isn’t included towards the $1042.86 requirement?
Employer contributions, government contributions and amounts transferred from Australia under the Trans-Tasman retirement savings portability, do not count towards the minimum contribution requirement.
When will you see the KiwiSaver Government Contributions in your account?
Member tax credits are paid out annually around July/August.
“Your KiwiSaver provider will claim the tax credit on your behalf after 1 July each year.
“You don’t have to do anything. Your member tax credit will appear in your KiwiSaver account within a month of your provider making the claim,” the Inland Revenue Department’s KiwiSaver website states.
Your member tax credit does not count as taxable income.
To be eligible you also need to reside mainly in New Zealand, except if:
- You are a government employee who is serving outside New Zealand.
- You are working overseas as a volunteer, or for token payment, for a charitable organisation named in the
As long as you ensure you personally contribute at least $1,042.86 a year to your KiwiSaver account, then you have an easy way to get some extra cash for your savings! So, what are you waiting for?
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