NZ Government Won't Make Super Tax Changes Until 2004

by Mary Swire, Tax-News.com, Hong Kong

19 September 2002

Speaking at a select committee meeting on Wednesday, New Zealand's Finance Minister, Dr Michael Cullen revealed that a planned tax break to encourage retirement saving will not now be introduced until 2004.

Currently, high earners in New Zealand (earning $60,000 per year or more) are taxed at a rate of 39%, but money paid into a superannuation scheme on their behalf is taxed at 33%, which represents an effective six cent in the dollar tax break.

Those at the other end of the scale (earning below $38,000) find that their employers' contributions are taxed at a higher rate than their personal income tax level, a disincentive to retirement saving which Dr Cullen has promised to address.

When quizzed as to why the government intends to wait so long to redress the tax balance between rich and poor savers, the Finance Minister revealed that to extend the tax break to low income earners will cost around $80 million annually:

'If you look at the available headroom on the fiscal forecasts...$80 million comes to a large chunk of that,' he explained.

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