INDEPENDENT NEWS

United Future secures super tax concession

Published: Wed 15 Oct 2003 03:50 PM
Media statement
For immediate release
Wednesday, 15 October, 2003
United Future secures super tax concession
United Future revenue spokesperson Gordon Copeland says Revenue Minister Michael Cullen has agreed to an important improvement in the tax regime relating to the withholding tax on employers’ contributions (SSCWT) to superannuation schemes for staff.
Government announced in introducing this year’s Tax Bill, a reduction in SSCWT from the current rate of 33 % to 21 % for employees within the $9,500 - $38,000 per annum earnings tax bracket.
This was to align the SSCWT rate with the marginal income tax rate of the employee. In other words, for tax purposes, the contribution would be treated as if it were additional salary.
“However this came unstuck”, said Copeland, “in relation to salaries in the range around $34,000 to $38,000. At that level an employer’s contribution of 10% would have tipped the total over the $38,000 tax threshold. Under the Government proposal, the whole of the employer’s contribution would then have been taken at the 33 cents level.
“That is incorrect. The portion of the employer’s contribution which falls below $38,000 should be taxed at 21 % not 33 %.
“Following my representations, Minister Michael Cullen accepts that this would be an over-taxation and has signalled his intention to rectify the situation as part of next year’s Tax Bill.
“This will allow time for the IRD to produce a new set of tax tables and to consult with businesses.
“The change will leave quite an additional amount of money in the pocket of tax payers. For example on a salary of $34,700 the SSCWT withholding tax will reduce from $1,145 to $749; a saving of $396.
“Thousands of employees will benefit since the $34,000 to $38,000 salary band is pretty much in line with the average level of salary and wages in New Zealand.”
Ends

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