Back at the end of September last year we let you know that the Tax Working Group (TWG) were working towards some changes they wanted to make on KiwiSaver funds to encourage retirement saving among the low-middle income earners of New Zealand, as well as some changes to the taxation of KiwiSaver funds and investments.

The biggest influencer on KiwiSaver funds and other investments could be their proposed introduction of a Capital Gains Tax (CGT) which would essentially be a tax on profit from the sale of an investment or property. The tax would affect assets such as monies invested in KiwiSaver, shares, land purchases, PIEs, businesses, investment properties, IP and more. This recommendation by the TWG was aimed at helping the Government raise $8 billion over five years.

The $8 billion raised through CGT would then theoretically be used by the Government to tackle funding for several issues including help allow a tax cut for low and middle-income earners.

KiwiSaver funds are currently exempt from tax on any gains made by the investor in New Zealand or in Australian shares.

On the other side of the coin, the Group also recommended a reduction of the lower KiwiSaver tax rates by 5%, taking them down to 5.5% and 12.5% respectively, and increasing the Member Tax Credit Government contribution from $0.50 to $0.75 for every dollar contributed up to a certain value.

Want to know more?
If you have any questions about the report recommendations and how they might affect you personally then please talk to your Adviser.

The Government will review the TWG report and their official response is expected sometime in April this year, though any changes (if adopted) wouldn’t come into effect until after the election in 2021.

The Tax Working Group full report was released on 21 February 2019. You can read the full report here.

AdviceFirst is a Financial Advice Provider (FSP23242).