Taxes are Key to Good Retirement

October 18, 2013 Taxation in Asia-PacificTaxation in New Zealand

MoneyWELLINGTON – The New Zealand government is being urged to evaluate the tax treatment retirement savings in order to ensure that taxpayers do not meet a cash shortfall with age.

In a statement issued on October 14th the New Zealand Financial Services Council (FSC) released a set of recommended tax changes, which could greatly encourage New Zealanders to make more use of KiwiSaver, the national retirement saving system.

According to the Council, in order to have a comfortable retirement, the average New Zealander needs to save at least 10 percent of their income for a period of 40 years from the age of 25.

However it was suggested that the contribution level could be reduced to 7 percent if the government implements sensible tax and investment policies.

The FSC is calling for the government to cut the tax rates applicable to the earnings realized from the KiwiSaver investments.

The funding for the tax cut should come by eliminating the tax free allowances and credit currently available as a means of attracting more New Zealanders to put money into KiwiSaver.

The Council also called on the New Zealand government to reevaluate the tax treatment of KiwiSaver versus other forms of retirement savings and investment.

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