More than 200,000 self-employed Kiwis will be excluded from KiwiSaver’s main tax incentive unless changes are made to the scheme’s legislation before the July 1 launch.
Employees who enter the KiwiSaver savings scheme may receive employers’ contributions tax-free for up to four per cent of their salary – a late change that was made to make KiwiSaver more attractive to New Zealand workers. However, for the thousands of self-employed Kiwis this incentive doesn’t apply.
Self-employed workers don’t have an employment relationship. As a result their KiwiSaver contributions do not qualify as “employer contributions� under tax legislation and this valuable tax exemption is not available to them.
Accounting firm Staples Rodway is currently lobbying the Government to amend the KiwiSaver legislation so self-employed workers can take advantage of the scheme’s main tax incentive.
Matt Baker, a Tax Associate at Staples Rodway, says excluding New Zealand’s self-employed workers from this tax incentive is a gross oversight from the Government.
“There are more than 200,000 self-employed people in New Zealand, from dentists to real estate agents to tradesmen. Why should they miss out just because they work for themselves as opposed to working for an employer,� he says.
“Often, individuals are required to work under their own name because their professional organisation requires them to. It seems quite unfair that such a large proportion of New Zealanders should be excluded from the main tax incentive of KiwiSaver for this reason,� added Mr Baker.
Staples Rodway is urging self-employed New Zealanders to join with them in recommending a change be made to the KiwiSaver legislation so they too can benefit from tax-free employer contributions.