HWI Chartered Accountants Auckland

The start date for the Kiwisaver scheme is set to be delayed upon the recent recommendation of a select committee. The scheme devised to turn around the poor saving habits of New Zealander’s was due to start 1 April 2007, however, this is now looking likely to be 1 July 2007 as it is believed the savings industry would not be ready in time.

The select committee report has also recommended that saver’s contributions be ring fenced so that the Inland Revenue cannot dive in and help themselves to meet outstanding tax liabilities. The committee has rejected pressure from unions in allowing deductions lower than the minimum proposed 4% of gross salary or wages. But in another development, contributions to the Kiwisaver scheme by employers up to 4% will be tax (SSCWT) free to employees (up to a cap). Savers will also be able to divert up to half of their personal contribution to pay their mortgage. Finally, the contribution that the Crown will pay into a person’s first KiwiSaver account remains at $1,000.

The bill is due for a second reading and is expected to be passed into law before the end of the year. HWI is working on an alternative scheme and will be in touch with employers later in the year if it proceeds.

The Government has recently issued an operational statement for discussion covering proposed changes to charitable organisations. Currently there is little monitoring of charitable organisations in New Zealand and little knowledge of who benefits, and how, from the exemption from income tax which applicable charities currently enjoy. The Charities Commission has recently been set up with the aims of promoting public confidence in the charitable sector, promoting the effective use of charitable resources, and assisting in fostering good governance of organisations.

Under proposed legislative changes, registration under the Charities Act will be a pre requisite to obtaining tax-free status. Charities will need to supply the Commission with an array of regular information including society rules, details of members with decision making influence and copies of annual financial statements to name a few.

Submissions close 30 September 2006.

The Government has recently tabled the Child Support Amendment Bill which seeks to amend the Child Support Act 1991. Its purpose is to increase the compliance of parents who do not meet their child support obligations, particularly those that hide significant income or assets to avoid child support. The Bill proposes the following main changes: -

• new provisions to write-off of penalty debt (penalty debt is paid to the crown not the custodial parent)
• two new exemptions from liability
• restructuring the exemption provisions
• a new administrative review procedure and new appeal rights
• new provisions for acceptance of overseas birth documentation