FSC responds to Government decision to not proceed with GST on KiwiSaver fees
The Financial Services Council (FSC) welcomes the Government’s decision today to remove the GST proposal for KiwiSaver fees from the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill.
This is the right decision by the Government and one that will benefit the retirement savings of New Zealanders over the long term.
At the heart of the issue are good retirement outcomes for all New Zealanders, and as an organisation with a vision to grow the financial confidence and wellbeing of New Zealanders, we believe that a GST tax on KiwiSaver fees was not conducive to this goal.
The FSC wants to encourage and support good policy that builds confidence and trust in the KiwiSaver system. After 15 years of KiwiSaver we need to ensure that the system is meeting the needs of all New Zealanders.
We would like to acknowledge the Government for their flexibility and willingness to engage on this issue, and we look forward to continuing collaborative discussions in the future so that we can craft a world-leading retirement savings system.
Key KiwiSaver facts
There are 2.92 million Kiwis who invest in KiwiSaver.
The total pool of assets in KiwiSaver is $84 bn.
Average balances in KiwiSaver – approx $27,000.
Total contributions for 12 months to June 2022 $5.86bn.
The FSC believes that the proposed changes to the taxation of KiwiSaver and managed funds announced today are a bad outcome and that the Bill overreaches.
The FSC has been a constructive participant in the consultation process and whilst we appreciate the efforts of the IRD to engage effectively, on the GST on managed funds and KiwiSaver issue there is much more work to be done to get the right outcome for New Zealand.
In the middle of a cost of living crisis, increasing taxes that are then likely to increase the fees that consumers pay to invest in KiwiSaver and managed funds, and potentially decrease returns, is a suboptimal outcome.
It’s disappointing that the Government has taken this approach. We look forward to continuing to engage with them and the IRD to get these settings right, as it’s what New Zealanders deserve.