Q I own and run a business in partnership with a family member and employ staff. Along with the rest of my staff I get paid a weekly wage, which has PAYE deducted. I recently took on a new payroll person and she suggested I join KiwiSaver. We filled out the forms and I started making contributions. Shortly afterwards I got a phone call from Inland Revenue. They said I could not join KiwiSaver, I could only "go private". They said it was because I was in partnership, rather than running my business through a company. They have refunded my contributions to me. Why can't I join KiwiSaver?
A. If you meet the criteria, you can certainly join KiwiSaver. Anyone under the age of 65 who is entitled to live and work permanently in New Zealand can join KiwiSaver.
Those who aren't working (including children) need to enrol directly with a provider of their choice. People who are working can either enrol through their payroll person (by filling out a KS2 form) or they too can contact a provider directly, who will let their employer know that they have signed up and what level of contributions they have chosen (currently 2, 4 or 8 per cent).
Many people like you who own their own business choose to get paid a regular salary with PAYE deducted, to avoid large tax bills. Others may take regular drawings and pay provisional and terminal tax. I would expect that most of those in the former category (like you) should be able to have their KiwiSaver contributions deducted from their salary, and get employer contributions as well (of course, this essentially comes out of their own pocket).
Someone who takes drawings will have to deal directly with a provider and choose how much they want to contribute. There won't be any employer contributions in their case but they can make a larger contribution to make up for this. Either way all contributions are taxed, so neither has an advantage over the other.
