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Getting your Big Five Hundy
 
Q.        In June each year I put $1042 into my KiwiSaver account to get maximum MTC.  I turned 65 in January. I know MTC stops at 65, but I believe I can still get MTC for the 6 months leading up to my birthday. Do I need to pay in $1042 or less?  And does it matter that I will be paying it in after I have turned 65? 
 
A.         Once you have turned 65, as long as you have been in KiwiSaver for at least 5 years, you will no longer be eligible for Member Tax Credits or MTC. However, your entitlement this year will be calculated pro rata depending on when you turned 65. MTC works out to $10 per week, so that will give you some idea of what you can expect.
 
According to an IRD spokesperson MTC “is calculated on the number of days from 01 July to the day before the member turns 65 based on the amount paid for the year - whether this be before or after the member turns 65.”
 
In theory you can top up your KiwiSaver right up to 30 June this year to get your MTC. If you are paying through your fund manager don’t leave it later than mid-June. But if the days fly by and by 30 June you have not yet made your payment, you can still do so by paying IRD directly through internet banking. Go to ‘Make a tax payment’ then select KSS (KiwiSaver member account). As long as your payment goes through before midnight on 30 June, Inland Revenue will be able to verify that it was received in time. 
 
For others like you who contribute directly, leaving your top up till May or June leaves you vulnerable. You may forget or not have the spare cash when the time comes. It is far easier to set up an automatic payment of $20 per week or $90 per month to your KiwiSaver fund manager. 
 
Your fund manager puts in a claim for MTC in early July for all their members, but they also make subsequent claims for members whose payments were received by IRD by 30 June but not sent on to the fund manager till after 30 June. Always check your KiwiSaver statements to make sure that you received the amount of MTC you were entitled to. Mistakes do occur but they can be put right. You can check back to see how much you received in previous years using your IR login, or ask your fund manager for a statement. 
 
The Retirement Commissioner has been running a campaign ‘Get Your Big Five Hundy’ to increase awareness of MTC. Apparently as many as three out of five people do not know about this annual Government top up.   Someone on the minimum hourly wage would need to add around $150 to their KiwiSaver account to get their full entitlement.  Anyone in KiwiSaver earning $34,762 or more should be contributing enough to get full MTC.
 
As you turned 65 on 1 January, contributing $521 yourself should entitle you to half that amount in MTC. There is no point in contributing more (unless purely from a savings point of view) as you will not get any more MTC. 
 
 
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz