Skip to main content
Inland Revenue

Tax Policy

PUBLISHED 19 May 2011

Budget tax bill introduced

The Taxation (Annual Rates and Budget Measures) Bill was tabled in Parliament this afternoon by Revenue Minister Peter Dunne. The bill introduces changes to KiwiSaver and Working for Families announced in Budget 2011. For more detailed information about the changes see the Minister's media statement, the bill and regulatory impact statements.

Hon Peter Dunne
Minister of Revenue

Thursday, 19 May 2011

Media statement

Dunne: Budget tax bill 2011 introduced

A taxation bill tabled today as part of Budget 2011 contains necessary changes to Working for Families and KiwiSaver to target them better and make Government spending more sustainable, Revenue Minister Peter Dunne said today.

The proposed Working for Families changes will focus the scheme more appropriately on lower incomes families. The proposals are to:

  • increase the abatement rate by 1.25 cents at every inflation adjustment round from 1 April 2012 until it reaches 25 cents in the dollar;
  • lower the abatement threshold at every inflation adjustment round from 1 April 2012 until it reaches $35,000; and
  • remove the inflation adjustment of Family Tax Credit amounts for children 16 and over until the amounts for younger children catch up.

Tax credits will begin reducing earlier on the income scale and will reduce faster.

“This will mean that a number of families higher up the WFF income scale will no longer qualify, or will receive lower amounts” Mr Dunne said.

Proposed changes to KiwiSaver are intended to ensure that the scheme continues to make it easy for people to save and so be better off in retirement, while reducing the cost to taxpayers of the subsidies to individual accounts.

  • All employer contributions to employees’ KiwiSaver accounts will be subject to Employer Superannuation Contribution Tax from April 2012.
  • The member tax credit (MTC) is to be halved from the next MTC year (year ending 30 June 2012), and the rate of payment of the credit will also be halved.
  • The minimum employee contribution rate will rise from 2% to 3% for all members. The default contribution rate will also be 3%.
  • Compulsory employer contributions will rise from 2% to 3% from April 2013.

Of these, the bill tabled today contains the MTC and Employer Superannuation Contribution Tax changes. The changes to employee and employer contributions will be contained in a bill to be introduced later this year.

The bill also sets the annual rates of income tax for the 2011–12 tax year.

Mr Dunne said that this bill was an important next step for the economy.

“The recent economic turmoil has brought into stark relief what we need to do to right our economy.

“We need to reduce our dependence on foreign debt and reduce spending. In total the Working for Families and KiwiSaver measures announced in the Budget will reduce government spending by an estimated $3 billion over the next four years, which will go a long way towards turning our situation around.

“These proposed changes will help ensure the future of the KiwiSaver and Working for Families schemes by focusing them better and making them more sustainable” Mr Dunne said.

More information is available on


Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985