Tax relief key to KiwiSaver
A Mercer analyst has called on the government to reduce the tax rate on KiwiSaver investments to a maximum of 15%.
Wednesday, November 5th 2008, 6:42AM
by David Chaplin
Newfield, who was based in Australia with Mercer until last year, said unless the KiwiSaver investment tax rate was reduced, over time, the value of the ‘kickstart’ payments and tax credits would be nullified.
“We need a ‘break even’ tax rate in New Zealand – an average rate at which the total investment tax paid by an individual over their life time equates to the various benefits paid by the Government – not a tax rate that ultimately penalises people for accruing, and then using, their retirement savings,” Newfield said in a statement yesterday.
According to Mercer research, the various government incentives for KiwiSaver would only represent 10% of an average individual’s retirement capital while 30% would be earned from income prior to retirement.
“A staggering 60 per cent is derived from investment earnings post age 65 – primarily due to the effects of compound interest,” Newfield said.
“Based on the modelling we know only a small portion of a person’s retirement capital and investment earnings, hence tax, accrue prior to the age 65, and therefore, as a minimum the tax rate on investment earnings post age 65 should be substantially reduced.”
In Australia superannuation investment earnings are taxed at a concessionary 15% tax rate.
National leader, John Key, has also expressed support for concessionary tax rates for long-term savings. In a speech to the 2007 Institute of Financial Advisers conference in Rotorua, Key said the Australian superannuation investment tax system could serve as a good model for New Zealand.
| « VTL directors resign; Company in receivership | Sovereign takes regulation bull by the horns » |
Special Offers
Commenting is closed
|
|
Printable version |
|
Email to a friend |
