Petition calls for end to 'tax unfairness'

A financial adviser’s petition to have Parliament stop automatically-enrolled KiwiSaver members being taxed at the highest rate by default is in the Finance and Expenditure select committee’s agenda on Tuesday.

Tuesday, July 14th 2020, 6:09AM 1 Comment

Rachelle Bland

Rachelle Bland said it was more than a year since Inland Revenue said it would take action to stop KiwiSaver overtaxing but nothing had yet happened.

It has been estimated that up to 450,000 people were overtaxed because they were being taxed by default at the top PIR when they should have been on a lower rate.

Bland said it was appalling that there had been no action. “It’s such a simple change.”

She said technology was blamed for members not having their correct rate calculated but it would be simple to add a box on the KiwiSaver enrolment forms that asked people to advise the correct PIR for their investment.

People were not told it was up to them to get it right, she said. “The IRD documentation to them says there’s nothing more you have to do.

“The guidance to employers and employees could be updated and the KS2 form could have a PIR field.”

She said she often saw people who were enrolled with the wrong tax rate through her financial literacy work with electrical apprentices.

Bland said she wanted change to protect the most vulnerable and financially dependent members of society. “It’s just not fair for these low-income earners. IRD is really failing them by allowing the concept of a default tax rate to exist.”

Bland said she had written to the chief executives of KiwiSaver schemes but had not had a response.

Overpaid PIE tax is not refundable but people have been chased for underpaid KiwiSaver tax.

Bland’s petition had 371 signatures.

Tags: KiwiSaver tax

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Comments from our readers

On 14 July 2020 at 11:29 pm Rachelle Bland said:
Just to clarify, I did get some responses to my letters to 26 KiwiSaver Scheme CEOs asking for industry support back in May 2019, but less than half replied. Everyone that replied agreed that it was an important issue that needed fixing. Some signed the petition personally, and a couple very enthusiastically indicated that they had strong relationships with senior people at the IRD and they would be able to get the issue resolved. Unfortunately that seemed to go nowhere.

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