How the member tax credit works

The member tax credit year is based on 1 July to 30 June. To receive the maximum member tax credit of

$1,042.86 you must have:

·         been a member of a KiwiSaver or complying scheme for the entire year, and

·         contributed at least $1,042.86.

If you join part-way through a membership year then at the end of the first year (30 June) you’ll receive a member tax credit in proportion to the length of time you’ve been a member. For example, if your start date is 1 January, then by 30 June you’ll be eligible for a maximum member tax credit of $521.43 (half of the annual maximum). How to calculate your membership start date is detailed below.

Important:

Employer contributions or any contributions you may divert to your mortgage aren’t included when calculating how much you’ve contributed in a year for the member tax credit entitlement. If you belong to a KiwiSaver scheme and another superannuation fund which has a complying fund, the tax credit will be paid to the fund that applies first.

 Who can get it?

To qualify for the member tax credit:

·         you must be 18 or over, and

·         your principal place of residence must be in New Zealand, except for:

·         a government employee who’s serving outside New Zealand

·         a person who’s working overseas as a volunteer, or for token payment for a charitable organisation named in the Student Loan Act regulations and if the work meets one or more of the requirements set out in the Student Loan Schemes Act 1992.

Note:

If you turn 18 during the year and meet the residency requirement, you’ll get member tax credit for the portion of the year that you’re 18.

 When do you get it?

Your scheme provider will claim the tax credit on your behalf from 1 July each year – you don’t have to do anything. It will be invested in your account anytime from July onwards, depending on when your scheme provider makes the claim. If you’re an employee and we haven’t received all your contributions from your employer when your scheme provider makes the claim, the balance will be paid once we receive it.

 How to calculate your KiwiSaver Membership Start Date

Please note that due to a successful legislative challenge this is different to previously communicated

 Active Choice Enrolments

1. If the member joined KiwiSaver between 1 July 2007 to 30 September 2007 and had deductions made from their salary or wages, or made a contribution into their KiwiSaver account prior to 1 November 2007, their eligibility for the member tax credit would commence from the earlier of:

·         the first of the month in which their KiwiSaver scheme provider received a valid application for KiwiSaver membership; or

·         the first of the month in which their first deduction had been made from salary; or their first contribution was received by their scheme provider or Inland Revenue.

2. If the member joined KiwiSaver between 1 July 2007 to 30 September 2007 but did not have deductions made from their salary or wages, or make a contribution into their KiwiSaver account until on or after 1 November 2007, their eligibility for the member tax credit would commence on the date their KiwiSaver scheme provider received a valid application for KiwiSaver membership.

3. If the member joined KiwiSaver on or after 1 October 2007 their eligibility for the member tax credit would commence from the earlier of:

·         the actual date their KiwiSaver scheme provider received a valid application for KiwiSaver membership; or

·         the first of the month in which their first deduction had been made from salary or wages or their first contribution was received by their scheme provider or Inland Revenue.

 Enrolments through an employer

1.     If the member joined KiwiSaver via their Employer their eligibility for the member tax credit would commence from the first of the month in which their first deduction had been made from salary or wages.

 How is MTC calculated when membership is less than 1 year?

·         The government intends to match member’s contributions up to a maximum of 20 a week, for the weeks they are a member.

·         The annual MTC entitlement is $1042.86, which equates to approximately $2.86 a day (1042.86 / 365).

·         A member’s MTC is therefore calculated at the lesser of ($1042.86 / 365) or the member’s actual daily contribution rate, for the number of days they are a member during the member credit year.

·    The member credit year is 1 July to 30 June so a “part-year” calculation is only required in the first and last years of membership.

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