Tax is one of life’s certainties, and it is part of KiwiSaver too.
It’s good to know how the taxation works on your contributions and investment earnings. The good news is that withdrawals are currently tax free.
Let’s start with your contributions. Remember, for employees these are calculated on your gross salary and wages and are paid from your after-tax income through your normal payroll.
Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT), which is deducted from the employer contributions before they are passed to your KiwiSaver scheme. The current ESCT rates are:
|Income (including gross employer contributions)||Rate|
|Less than $16,800||10.5%|
|Between $16,801 and $57,600||17.5%|
|Between $57,601 and $84,000||30%|
|Between $84,001 and $216,000||33%|
|$216,001 and over||39%|
The Summer KiwiSaver scheme is a portfolio investment entity. The amount of tax you pay is based on your prescribed investor rate (PIR). You can work out your PIR below or go to the Inland Revenue website. If you are unsure of your PIR, we recommend you seek professional advice or contact the Inland Revenue Department.
It is your responsibility to tell Forsyth Barr Investment Management your PIR when you invest or if your PIR changes. If you do not tell Forsyth Barr Investment Management, a default rate may be applied. If the rate applied to your PIE income is lower than your correct PIR you will be required to pay any tax shortfall as part of the income tax year-end process. If the rate applied to your PIE income is higher than your PIR any tax over-withheld will be used to reduce any income tax liability you may have for the tax year and any remaining amount will be refunded to you.
The Inland Revenue may also tell us to update your PIR if their records indicate a change is required, in which case we will update your PIR and let you know.
Changing your PIR is easy, you can update it online via your profile.
If you are a tax resident of New Zealand work out your PIR using the table below or by completing the questions, based on your income for the past two years.
If you are not a New Zealand tax resident your PIR is 28%.
|Taxable income (In EITHER of the last two income years)||Taxable income plus Portfolio Investment Entity (PIE) income (In EITHER of the last two income years)||PIR|
|$14,000 or less||$48,000 or less||10.5%|
|$48,000 or less||$70,000 or less||17.5%|
|All other cases||28%|
Your tax advisor can help you work out your PIR or visit the Inland Revenue website.
MyIR also allows you to check what Inland Revenue have calculated your PIR to be. Read more about viewing KiwiSaver information through myIR.