When saving, every dollar counts

I was working on wages until August last year. I wanted to make sure I had contributed enough to my KiwiSaver to get the maximum tax credit so I kept an eye on it meticulously. According to my provider, I contributed $1205.66 from July 21, 2015 to June 2, 2016. I was confident I would get the full tax credit, but I was disappointed when I saw the government tax credit was only $413.10 not $521.43. I am no longer working so am trying to make the most of my KiwiSaver before I turn 65 in three years time. I am disappointed if I have made an error by not having enough contributions. What can I do?

Inland Revenue administers KiwiSaver and pays out Member Tax Credits to qualifying KiwiSaver members.

To do this they calculate all employee contributions for the 12 months from July 1 to June 30.

Fund managers also calculate contributions paid directly to them, and put in a claim on behalf of members to IRD.

Qualifying members (usually those over 18, under 65 and living in NZ) get 50c for every dollar they contribute, up to a maximum of $521.43 if they contribute $1042.86 or more.

I asked IRD to comment on your situation. They replied: "For a KiwiSaver member contributing via their employer the contributions included in the MTC calculation are not what has been received into their account with their scheme provider in the year ended June 30, but rather what has been deducted from their wages in that same time period".

You may have worked out your entitlement based on the dates and amounts showing on your provider's website. However, your KiwiSaver contributions for June 2015 would probably have been submitted to IRD in the Employer's Monthly Schedule (or EMS) during July 2015, and then forwarded to your provider.

The IRD spokesperson explains: "Many employed KiwiSaver members have their annual MTC claim submitted by their scheme provider and payment made by Inland Revenue before their employer files the June EMS. In cases where the maximum MTC entitlement hasn't been received Inland Revenue automatically does an additional MTC calculation once the June EMS is received and where appropriate makes an additional supplementary MTC payment through to the member's account".

I suspect that the money received by your provider on July 21, 2015 was in fact deducted from your wages during June 2015, and included in the previous year's MTC calculations.

As you were probably working for that whole year, you may have contributed more than enough to get full tax credits. Unfortunately, overpayment in one year does not get rolled over to the following year.

KiwiSaver members contributing to KiwiSaver through their wages can track their contributions online, if they have set up an IR login (this is easy to do).

Once you have logged in, go to My KiwiSaver and click on 'View Transactions'. You can select a time period and a type of transaction eg deductions from salary/wages.

This will give you the correct information on how much you have contributed over the KiwiSaver year to June 30. If you still think a mistake has been made, send an email to Inland Revenue asking them to check their figures.

If you can afford to continue making KiwiSaver contributions in your current circumstances, consider setting up a direct debit for $20 per week directly to your provider.

This will help you qualify for full member tax credits over the next three years, and give you extra spending money once you turn 65.

- Shelley Hanna is an authorised financial adviser FSP12241. Her free disclosure statement is available on request by calling 06 870 3838 or go to www.peak.net.nz. The information in this article is general and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz