Kiwisaver Taxes: An Introduction

The Kiwisaver is an odd duck to me: you pay taxes on your contributions like in a Roth. When you pull out your money, you don't have to pay any taxes on it (also like a Roth IRA), but unlike a Roth, you pay taxes on the returns as you go along. The Roth is an infinitely better deal. I have no idea how that works, if they take the taxes out every month (like they do in my savings accounts, BLEH), or if it is quarterly, or even annually.

Here is what I could get from Mary's book:

• The highest tax rate on returns is 30%, which benefits people that make over $48K (me, just barely).




• no one pays taxes on the $1K kickstart and the tax credits OR the employer contributions (so they are contributing 2% of your before-tax salary!)




• PAY NO TAX when pulling the money out (Although for us Americans, the US may have something to say about that. Stupid greedmonsters)




• ACC levy is NOT taken out (usually 1.5%)

Next up, a biggie: Trying to pick a provider!

(*Disclaimer: I AM NOT A FINANCIAL PROFESSIONAL; USE INFORMATION ON THIS BLOG TO MAKE DECISIONS AT YOUR OWN RISK.)

Information in this post taken from "The Complete KiwiSaver" by Mary Holm, published 2009.