Definition of "member credit contribution"

Submission

(Matter raised by officials)

The definition of “member credit contribution” in section YA 1 of the Income Tax Act 2007 (and in section OB 1 of the Income Tax Act 2004) should be amended to exclude the $1,000 kick-start payment and the member tax credit.

Comment

In determining the amount of the member tax credit payable to a member, section MK 4 of the Income Tax Act 2007 takes into account the total yearly amount of a person’s member credit contributions for all of their KiwiSaver scheme amounts and complying superannuation fund amounts. The definition of “member credit contribution” in section YA 1 is an amount of a superannuation contribution to a KiwiSaver scheme or complying superannuation fund, excluding employer contributions and contributions diverted under the mortgage diversion facility. The $1,000 kick-start payment and the member tax credit have not been excluded from this definition. The policy intent is that they should be excluded, otherwise members can “double-dip” by including these Crown contributions in the calculation of the member tax credit.

Officials therefore recommend that an amendment be made to exclude the $1,000 kick-start payment and member tax credit from the definition of “member credit contribution”.

Recommendation

That the submission be accepted.