Charities eligible for KiwiSaver employer tax credit
Revenue Minister Peter Dunne is reassuring charities and other tax-exempt organisations that make employer contributions to KiwiSaver schemes that they will be eligible for the new employer tax credit announced in Budget 2007.
"I have received several letters from charitable organisations saying they are worried that they might not qualify for the employer tax credit because they are exempt from income tax.
"I want to reassure charitable organisations that they will indeed be eligible for the employer tax credit, which has been designed to reimburse all employers for their contributions to their employees' KiwiSaver schemes.
"The employer tax credit is an important part of a package of measures announced in Budget 2007 to improve private savings by making it more attractive for people to save through KiwiSaver and similar work-based schemes.
"Once the relevant legislation has been enacted, employers will be required to make a contribution for each employee who has deductions for KiwiSaver or complying superannuation funds made from his or her gross pay.
"The employer contribution will be phased in over four years, starting at one percent of gross salary or wages on 1 April 2008 and reaching 4 percent on 1 April 2011.
"The accompanying employer tax credit, which is also part of the proposed legislation, will help offset the impact on employers of compulsory contributions on behalf of their staff who are members of KiwiSaver or a complying superannuation fund.
"The employer tax credit will match employer contributions of up to $20 a week for each employee. It will fully offset the cost of compulsory employer contributions for salaries of up to $104,000 in year one, and $26,000 a year when compulsory employer contributions are fully phased in.
"The law changes that give effect to all these measures are part of the taxation bill currently before Parliament, which is expected to pass later in the year, Mr Dunne said.
Ted Sheehan, Tel: 04 470 6985, Cell: 021 638 920