KiwiSaver tax credits’ Bill has first reading

Building and Housing Minister Dr Nick Smith and Revenue Minister Todd McClay today welcomed the next important step in the Government’s HomeStart package for first home buyers with the first reading of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill.

“These changes to KiwiSaver will complement the new HomeStart scheme and enable tens of thousands more young New Zealand families to pull together a deposit to own their own home. The major change is allowing KiwiSavers to withdraw the annual member tax credit paid by the Government alongside the contributions they make and those made by their employers,” Dr Smith says.

“This change will increase the maximum withdrawal amount by $521 each year for every year a member has been contributing to KiwiSaver and allows members to withdraw all of their KiwiSaver savings with the exception of the $1000 kickstart,” Mr McClay says.

The Taxation (KiwiSaver HomeStart and Remedial Matters) Bill implements one part of the Government’s new support package for first home buyers which was announced by Dr Smith in August. The HomeStart package also includes:

• A doubling of the support for first home buyers where they are purchasing a new home;
• Increasing the house price caps to the more realistic levels of $550,000, $450,000 and $350,000; and
• Expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.

“This total package will help about 90,000 lower and middle income first home buyers over the next five years. We are roughly doubling the number of people receiving a Government grant to buy a first home from 10,000 per year to 20,000 per year. We are also doubling the Government grant buyers are eligible for if they are buying a newly-built home, with the focus of the package to increase the supply of new housing and to encourage housing companies to build homes in a price range affordable for first home buyers,” Dr Smith says.

“These changes double the Government’s support for first home buyers from $217 million to $435 million over the next five years,” Dr Smith says.

“The first reading of this Bill today is great news for first home buyers. Every dollar helps when you’re trying to get on the property ladder. Higher income earners will also benefit by being able to withdraw more of their savings for their first home, but they will not be eligible for the HomeStart grant,” Mr McClay says.

“HomeStart is the most significant Government support for first home buyers in more than a generation and comes into effect on 1 April 2015. It stands alongside the Government’s other housing initiatives, including opening up new residential land, reducing tariffs on building materials, investing more in building skills and reducing compliance costs,” Dr Smith says.

The Taxation (KiwiSaver HomeStart and Remedial Matters) Bill also corrects errors made in amendments to the Income Tax Act 2007 and the KiwiSaver Act 2006 in the Veterans’ Support Act 2014.