How to make a voluntary contribution
You can make a voluntary contribution directly to your KiwiSaver provider. However, there are three easy ways you can make a payment to Inland Revenue who will then pass it onto your KiwiSaver provider:
- Internet banking – choose the “pay tax” option on your internet banking service. However, you need to ensure you include your IRD number, the tax type “KSS” and the period “0” (zero).
- At Westpac – pay over the counter at any Westpac branch.
- By cheque – send a cheque, made out to Inland Revenue, with a completed payment slip to: Inland Revenue, PO Box 1454, Hamilton 3240.
- By direct debit – please call us to request a direct debit form. This can be the fastest option to transfer your funds.
What is a member tax credit (MTC)?
To help you save, the Government will make an annual contribution to your KiwiSaver account if you are eligible. The member tax credit will be paid each year (around July/August) to members of a KiwiSaver scheme until you’re eligible to withdraw your savings, provided you are over the age of 18 and mainly reside in New Zealand. The maximum annual MTC you are entitled to is $521.43 for each year (1 July – 30 June), and to qualify for it fully you need to contribute at least $1,042.86 a year. Employer contributions do not count towards eligibility for this credit.
In a nutshell, the Government will pay 50 cents for every dollar of member contribution annual up to a maximum payment of $521.43, so if you don’t contribute $1,042.86 or more, you will still get a portion of the MTC for what you have contributed each year.
If you join KiwiSaver part-way through a year (1 July – 30 June), you will receive a MTC based on the number of days in the year you have been a member.
Your KiwiSaver provider will claim the MTC on your behalf after 1 July each year, so you do not have to do anything yourself. Your MTC will appear in your KiwiSaver account within a month of your provider making the claim.
Your MTC does not count as taxable income.
How to find out whether you have contributed enough to qualify for the full member tax credit (MTC)
To find out how much you have contributed to your KiwiSaver account this year, log in to your provider’s website. If this is Booster, click here and it clearly shows how much you have contributed and your overall KiwiSaver balance. Please contact us and talk to one of our KiwiSaver team if you need assistance.
Children as KiwiSaver members
Any child, as long as they have a IRD number, can become a KiwiSaver member. Because they are not employed, unless their parent/guardian makes regular contributions, their investment will not grow as quickly compared with a KiwiSaver scheme fund with money being regularly contributed, even if on an annual basis. To set up an automatic payment or to make a voluntary contribution (see above).
Prescribed investor rate (PIR)
A PIR is your tax rate that you select so that your KiwiSaver scheme provider can calculate the tax on the income it derives from the investment of your contributions. The PIR is based on your taxable income, eg income from salary, wages and any additional sources of income you would include on your income tax return. Go to http://www.ird.govt.nz/toii/pir/ for more information, including how to work out your PIR rate.
* Stewart Group are not tax specialists and recommend you seek independent advice from a tax or accounting expert.
Self-employed or unemployed people
Unlike employees who are paid through a PAYE system and have automatic deductions for KiwiSaver, you will need to make manual payments or voluntary contributions (see above). However, to make this easy you can set up an automatic payment to make a regular payment, say, on a monthly basis. Click here to download an IR586 to set up an automatic payment authority. If you contribute at leave $87 per month, then you may qualify for the member tax credit. Alternatively, you can make an annual payment of $1,042.86 prior to 30 June to still quality for the member tax credit also.