Personal finance and KiwiSaver columnist at the NZ Herald

Kiwisaver: Time to top up account for full tax credit

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Anyone who is entitled to cash from the govt and has not contributed $1042 for the year can add some extra

Photo / Thinkstock
Photo / Thinkstock

This is a silly question.

Tell me if a person holds down two jobs would you get a double annual government contribution of $521.43?

Or would it be just classed as an extra contribution towards my KiwiSaver from my side?

There's no such thing as a silly question in my book.

Give yourself a pat on the back for actually knowing what the member tax credit - the Government's yearly contribution to your KiwiSaver fund - actually comes to.

According to a report by KiwiSaver provider Mercer released last month only 31 per cent of people surveyed knew $521 was the maximum payment for the annual tax credit.

I asked Fiona Oliver, general manager, Wealth Management, AMP about what happens to the member tax credit when you work at more than one job.

This is what Oliver had to say: "I always say if you don't ask, you don't get. But unfortunately in this case, there's no 'getting' - the maximum member tax credit (MTC) eligible to individuals contributing into a KiwiSaver account is $521.43 each year - regardless of the number of jobs you contribute from.

"For every dollar you put into your KiwiSaver account, the Government puts in 50c, up to a maximum of $521.43 each year - this is effectively free money for KiwiSaver contributors.

"The MTC is paid into your KiwiSaver account in late July or August.

"You've asked this question at a great time, because in order to get your full MTC this year, you need to have contributed $1042.86 to your KiwiSaver account between July 1, 2013 and June 30, 2014 (the KiwiSaver MTC year).

"So if you've contributed this full amount by the end of June, then you absolutely should be eligible to receive your full $521.43.

"However, if you have only joined or turned 18 part-way through the KiwiSaver MTC year, then your MTC will be reduced to reflect the part year for which you were eligible."

"Also, in order to qualify for MTCs, you need to mainly reside in New Zealand and be between 18 years old and the qualifying age for NZ Super (currently 65 years).

"If you joined KiwiSaver after age 60, and you are within five years of joining, you are still eligible for an MTC," says Oliver.

Up until July 2011 the annual member tax credit was $1042, but even though it has halved it's still worth making sure you have paid enough into your KiwiSaver account to get the full amount.

If you're not sure you've contributed enough during the KiwiSaver year to June 30 get in touch with your provider as soon as possible and if necessary top up any shortfall.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice before making an investment decision.

To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail com

- NZ Herald

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Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose is a freelance business journalist who writes regularly about KiwiSaver and entrepreneurial companies. She has written for the Business Herald since 2006, covering the telecommunications sector, but has more recently focused on personal finance and profiling successful businesses.

Read more by Helen Twose

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