QUESTION: Regarding your article in HB Today last week, can you please confirm for me that when you have been in the Scheme for five years and you are over 65 years of age that the Government stops the "tax credit" contributions of $521 per year? What would happen if my maturity date is in December and I cash up my KiwiSaver - would I get the tax credits owing to date?
ANSWER: You will no longer be entitled to the Member Tax Credit (or MTC) once you reach the Maturity Date (in the Scheme for five years and turning 65).
The KiwiSaver year runs from July 1 to June 30. The administration manager for each scheme submits information to Inland Revenue in July each year, claiming the MTC on behalf of investors. That money gets paid into each investor's KiwiSaver account.
The MTC is based on the amount contributed each year by the member (not employer contributions) up to a maximum of $521 for contributions of $1042 or more. (For those readers who are still confused by the term, the Member Tax Credit is an actual payment to all eligible KiwiSaver members from the Government every year.)
If any member join the scheme during the year, they are only entitled to a proportion. If they make no payments into their scheme during the year, they do not receive any MTC.