Valid points there. Was helping a friend work out how to get their money from their Kiwisaver account now that they are retired and discovered that the withdrawals are subject to PIE tax (from 10 to 28%).

That seems like double taxing to me. Your contributions are tax paid so like a bank account only the interest should be taxed yet they tax they whole withdrawal. Or maybe the employer contribution is not taxed.

But if you stuck your money in a TD then only the interest would be taxed. 

As you say given the current real estate capital gains tax (or lack thereof and I am not complaining) might be better to buy a house or two.

Your advice re Kiwisaver sounds incorrect.

This is from the government's own site:

"KiwiSaver contributions are deducted from your before-tax pay. Investment earnings are taxed. Withdrawals from KiwiSaver are tax-free."

lchiu7: Not my advice, just what I was pointed to.

https://www.amp.co.nz/content/dam/ampnz/documents/kiwsaver/AMP_KiwiSaver_RetirementWithdrawal.pdf

For AMP anyway they ask for PIE rate for withdrawals.

If no tax then not sure why they are asking.

Not taxed on withdrawal. 

Retirement taxation is one thing, sure, but to look at it in isolation and ignore migration patterns, supply issues, materials market structure, council land limits, etc, is to leave out the bulk of the actual drivers of housing price increases. 

OK I called AMP and worked it out. They ask for the PIE tax rate because it might be several months since you stopped working and retired and your PIE tax rate might still be say 28% when it should now be 10.5%. So that means they tax your dividends at the lower rate before you make a withdrawal.

Poorly worded form.

Geektastic:

 

This is from the government's own site:

 

"KiwiSaver contributions are deducted from your before-tax pay. Investment earnings are taxed. Withdrawals from KiwiSaver are tax-free."

 

Also from the government website:

 

Your KiwiSaver contributions are calculated on your before-tax pay. However, you still pay tax on the full amount that you earn.

 

For example, if you earned $100 and had 8% ($8) KiwiSaver contributions deducted, you would still pay tax on the full $100

 

...

 

All employer superannuation cash contributions (employer contributions) will be liable for tax. This means that there may be a reduced amount of employer contributions being paid into your KiwiSaver scheme.

So certainly correct that withdrawals aren't taxed. But your quote implies that contributions aren't taxed either when they are, so they have some very poor wording on their own site.

Very bad wording. It implies that withdrawals are taxed but what they are really asking, confirm your PIE tax rate since if you are withdrawing your Kiwisaver, then you probably have reached retirement age and might actually be retired and not working. Then your income might be lesser and perhaps that changes your PIE rate.

So in the apparently common scenario where people don't take all their retirement out but have it drip fed on a regular basis and you have no other income apart from National Super, then you would want your PIE tax rate to be at the lowest rate for all future dividends you might be getting.

Well poor wording perhaps but also poor understanding. It's a bit silly to think your KiwiSaver contributions are going to be taxed at 28% when you try to withdraw them.. KS has been around for a decade mate.

Geektastic:

 

Hallelujah! 

 

 

 

Someone has finally cottoned on to what I have been saying for years. A massive driver of high house prices is the way in which retirement saving is taxed in NZ. See here.

 

lol, very self indulgent and not true at all. Here's an article from May last year on that very thing. You're not the first to think of it and it ain't your idea buddy.

https://www.stuff.co.nz/business/money/92207613/kiwisavers-harshly-taxed-compared-to-property-investors-book-claims

bmt:

 

Well poor wording perhaps but also poor understanding. It's a bit silly to think your KiwiSaver contributions are going to be taxed at 28% when you try to withdraw them.. KS has been around for a decade mate.

 

Geektastic:

 

Hallelujah! 

 

 

 

Someone has finally cottoned on to what I have been saying for years. A massive driver of high house prices is the way in which retirement saving is taxed in NZ. See here.

 

 

lol, very self indulgent and not true at all. Here's an article from May last year on that very thing. You're not the first to think of it and it ain't your idea buddy.

 

https://www.stuff.co.nz/business/money/92207613/kiwisavers-harshly-taxed-compared-to-property-investors-book-claims

 

I don't suppose I am - but I can tell you I have been saying it for about 10 years, rather than since last May...