The central feature of the bill proposes to extend the current KiwiSaver withdrawal rules for first-home buyers on 1 April 2015 as part of the Government’s HomeStart package announced in August 2014.
Under the current rules, KiwiSaver members who are purchasing their first home are able to withdraw the contributions they and their employer have made, to supplement a deposit on a first home.
The proposals in the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill will allow them to also withdraw their member tax credit, giving these members access to up to an extra $521 for each year the Government has contributed to the scheme. The Government’s $1,000 kick-start contribution is excluded from the provisions in the bill and cannot be withdrawn so a member’s KiwiSaver account remains open and active after the withdrawal of eligible funds.
Four submissions were received on the KiwiSaver proposals in the bill and are covered in this officials’ report.
No submissions were received on the proposed remedial amendments to the Income Tax Act 2007 and the KiwiSaver Act 2006, which will ensure that income replacement payments made to New Zealand veterans are taxed as intended by the Veterans’ Support Act 2014.
The bill therefore clarifies that income replacement payments for veterans will be treated in the same way as ACC compensation payments for taxation, social policy and KiwiSaver purposes, and will be taken into account for social policy calculations such as when applying for Working for Families tax credits.