KEY POINTS:
The Government says it will move to fix mistake in the KiwiSaver legislation which makes it less generous than intended.
Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced today that legislation passed after the budget did reflect the Government's intent.
"People who join KiwiSaver will be entitled to a tax credit that matches their contributions up to $20 a week from when they become a member," the ministers said in a statement.
"As it is worded, the legislation does not reflect this policy intent, with the result that some savers would not become eligible for the tax credit until several weeks after they began making contributions. That is not how the legislation was intended to work."
New legislation would be introduced to ensure KiwiSaver members are eligible for the government subsidy from the day they begin saving.
"The member tax credit will apply from the first of the month in which the contribution is made. This means, for example, that all contributions that begin in July will be matched by a tax credit from 1 July; those that begin at any point in August will count as having begun on 1 August, and so on," the ministers said.
The amendments will be attached to a taxation bill that is before Parliament.
The announcement of the need for the technical adjustment comes on the day that the KiwiSaver scheme takes effect.
- NZPA
