We are well and truly into the New Year, the financial year is drawing to a close, but did you know you could greet the New Year with some free money? Alex explains.
People are often surprised to hear that the government actually hands out free money to everyone who contributes to KiwiSaver. It comes in the form of Member Tax Credits.
So how much Member Tax Credits (a.k.a “free money”) can you get?
That all depends how much you put in to KiwiSaver. The government will pay 50 cents for every dollar a member contributes annually up to a maximum payment of $521.43. This means that you must contribute $1,042.86 annually to qualify for the maximum payment of $521.43.
For most people who haven’t opted out for KiwiSaver, this will happen automatically by contributing (a minimum) three per cent of their income on KiwiSaver. For most full-time workers this will take you over the $1042.86 threshold.
However, if you have not been contributing due to a KiwiSaver holiday or you are self-employed or you have been without a job, KiwiSaver’s Member Tax Credits could still work for you.
To explain, you may have heard this saying: "The best time to plant a tree was 20 years ago. The second best time is now!” As in previous mentioned situations, you are still eligible for KiwiSaver’s “free money” by manually adding some extra funds to your KiwiSaver. If you do this before the end of the KiwiSaver year (this year runs from 1 July to 30 June) you will receive this year’s Member Tax Credits.
If you don’t have a KiwiSaver or have some questions about it feel free to contact me for an obligation-free chat.
Fun Fact: Last year the government set aside a whopping $500 million of Member Tax Credits that were unclaimed by participants.
Also read this helpful Stuff.co.nz article: http://www.stuff.co.nz/business/money/10506702/KiwiSavers-missing-400m
Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request