Offset of "hybrid" scheme contributions against compulsory employer contributions

Submission

(10 – New Zealand Society of Actuaries)

The hybrid schemes amount in section 101D(6) of the KiwiSaver Act should be amended to add an allowance for the amount of employer superannuation contribution tax payable on this employer contribution.

Comment

Under the KiwiSaver Act an employer who is contributing to an employee’s existing superannuation scheme can offset the amount of those contributions against the amount of compulsory employer contributions to KiwiSaver. The amount that can be offset is the amount the employer is required to pay, including the amount of employer superannuation contribution tax that is payable on such contributions. As the rules applying to hybrid scheme amounts do not refer to an employer’s superannuation contribution, the legislation does not provide any certainty that such amounts are inclusive of the amount of employer superannuation contribution tax payable. The policy intent is that it should and this is reflected in Inland Revenue’s Tax Information Bulletin (April 2008) on the matter.

Recommendation

That the submission be accepted.