Latest news with #Superannuation
NZ Herald
23-05-2025
- Business
- NZ Herald
Budget 2025: $6.6b business tax incentive much needed but abrupt closure of pay equity door not ok - Fran O'Sullivan
More of that later. But Willis' $6.6 billion windfall for business after some years of sluggish growth is welcome. The incentive allows businesses to deduct 20% of a new productive asset's value from their tax returns. This ought to be a spur to New Zealand business to invest more and perhaps make for a more joyful spend-up on new tractors and machinery at next month's Fieldays. For foreign investors who are also benefiting from some pre-Budget announcements, it places the tax incentive in the right place. Their tax incentive will come from actually investing in hard assets rather than a special corporate rate on profits which would be more open to manipulation. The Budget also provides a welcome nudge to getting more New Zealanders to stand on their own feet (or their parents' feet in the case of late teenagers which will hopefully incentivise them to push their kids into work or more education). Means-testing Best Start – where parents get a weekly payment for their children – will be extended for all three years for those earning over $180,000. Cutting back the Government's contribution to KiwiSaver at the same time ensuring workers and employers lift their contributions to 4% each of salaries by 2028 is also a good step. But the Government has stopped short of introducing full compulsory savings as with Australia. Back in the day when The Economist used to send their economics editor down to New Zealand economy-class to report on the bold steps the 4th Labour Government was imposing to transform the economy and dig New Zealand out of a seemingly impossible debt hole, there used to be a running joke about how New Zealand was essentially a 'bunch of public servants by the sea' – looping rather unfairly into this slogan the many on welfare as well as heavily subsidised farmers and manufacturers benefiting from the fraud that was import licensing. That was pared back. But subsequent Governments have again increased welfare dependency by extending family tax credits and the like and by wilfully not facing up to a fast-growing New Zealand Superannuation impost by instituting sensible means testing and claw backs and lifting the age of eligibility over time. Unless we get surging economic growth, that super iceberg remains a major threat to our long-term livelihoods. The New Zealand Taxpayers' Union's Debt Clock on its nationwide tour. Photo / Ayla Yeoman In a second word, the Budget is 'ruthless' All finance ministers need nerves of steel to manage difficult Budget trade-offs – particularly with the enormous Government debt left over from the Covid years; the much-needed impulse to get debt down yet at the same time provide a spur to growth. Plundering the forecast 'fund' for pay equity settlements to the tune of $12.8b over four years to help finance the $6.6b tax incentive for business will stick in the craw of many New Zealand women. It gives opposition parties a stick to beat the coalition with right through to the 2026 election. Although it is commensurate on Labour in particular to explain how they will fund pay equity payouts given Willis' revelation the costs had blown out from forecasts dating back to 2020 that Labour's pay equity regime was expected to cost just $3.7b over the period. When it comes to that part of the politics of the Budget, Willis and her boss Christopher Luxon have a great deal of explaining and soothing to do. The ice-cool Brooke van Velden – Minister of Internal Affairs and Workplace Relations and Safety – recently pronounced in Parliament that she was 'strong Mr Speaker'. Strong enough to use Parliament to deflect the pay equity issue from one of fairness to the 'misogyny' she and her female Cabinet colleagues had apparently suffered from being slammed with the 'C' word. But not strong enough to take early public advice on the issue and flag the projected fiscal blowout (and start talking with the unions on options) well before the day the coalition used Parliamentary urgency to slam the door shut. It's notable that van Velden is seen by many to have operated a 'shut-door' approach to the union sector. This is something Luxon needs to reassess. He is a fan of the systems operated in small, advanced economies like Singapore and Ireland. But their successes came out of a strong consensus built by the three pillars of their economies: Government, capital and labour. It's not as if he doesn't 'get this'. He chiefed Air New Zealand at a time when labour relations were exemplary. Port of Auckland's increased financial success was also borne out of a changed labour environment. Take note. This needs to be rethought. Achieving pay equity has been and remains a long slog. Pay equity protesters on Budget Day. Photo / Marty Melville The state sector was a leader in equal pay for men and women. It took our legislators to introduce Equal Pay legislation in 1976 so that women working in the private sector were paid commensurate with men for the same job. Those of a certain age have sharp memories of working in factories, hospitals and the like and being paid two-thirds that of men doing the same job meantime putting up with bullying foremen ensuring women stayed on the job while the blokes had prolonged 'smokos'. That scenario has thankfully long changed and women are these days valued, but clearly not enough in the eyes of many. Many women – including this columnist – find the means the Government has used to slam the pay equity door shut for now unacceptable but understand the end, ie to redirect the $12.8b to either fund half the $21.4b Budget savings cuts or pony up half the cost of the $6.6b tax incentives for business – depending on your philosophical stance. Generous In a third word, the Budget is generous. Treasury forecasts New Zealand will sport 3% GDP growth by 2027 with unemployment decreasing and inflation staying within the 0-3% bounds. The economy is benefiting from high international dairy and meat prices (the lower New Zealand exchange rate particularly against the US dollar also assists). But net core debt is expected to peak at 46% in 2027/28 with borrowing costs continuing to rise and this leaves us with not much of a buffer against predictable risks like major earthquakes or flooding disasters let alone global financial crises or pandemics. Given this backdrop, the $6.6b tax incentive for business could be construed as generous. There's not a great deal in the Budget for infrastructure. But the tax incentive allowing businesses to deduct 20% of the hard costs of new assets will be attractive to that sector as well. It will also help make the shift further away from state borrowing to directly fund infrastructure to more public private partnerships and a user pay model where users also contribute via road tolls and the like to pay for new infrastructures, not simply taxpayers. Let's hope sufficient businesses do take up the new incentives, invest more and employ more in their firms. It is timely.
Scoop
19-05-2025
- Business
- Scoop
A Pathway To Surplus: Taxpayers' Union Releases Blueprint For Government To Cut Spending Deficit
Press Release – Taxpayers' Union The report proposes a range of measures, including more targeted welfare spending, phasing out ineffective corporate subsidies, assessing state-owned enterprises for possible privatisation, and streamlining the public sector by eliminating overlapping … The New Zealand Taxpayers' Union has today launched the second in its series of briefing papers aimed at addressing the government's spending deficit. TitledA Pathway to Surplus, the paper outlines more than $35 billion in potential savings and over $100 billion in possible asset sales. The release follows widespread concern expressed by New Zealanders during the Taxpayers' Union's Hīkoi for Balanced Budgets, which concluded yesterday. 'From Whangārei to Invercargill, people asked us the same question: how can the Government stop the debt from rising?' said Taxpayers' Union Executive Director Jordan Williams. 'This report contains the answers. It offers Finance Minister Nicola Willis oven-ready options to smash the deficit, stop the borrowing debt, and restore New Zealand's financial resilience.' The report proposes a range of measures, including more targeted welfare spending, phasing out ineffective corporate subsidies, assessing state-owned enterprises for possible privatisation, and streamlining the public sector by eliminating overlapping bureaucracy. 'You don't have to agree with every proposal in the paper, and that's okay. But tough conversations and bold decisions are necessary. This paper makes the case for those decisions.' 'None of the ideas are radical. They are pragmatic, evidence-based recommendations rooted in fiscal common sense.' While each recommendation is presented as an option, the paper stresses that inaction is not. 'New Zealanders deserve better than business as usual,' said Williams. 'We owe it to future generations to make the hard choices now while we still can. The pathway to surplus is clear. It's time for our leaders to take it.' The report's key recommendations include: Selling down assets making a poor (or negative) return, allowing the Crown to recycle capital and build quality infrastructure; Reversing index-free student loans and free tuition policies; Raising the pension age and indexing to life expectancy to sustain the Superannuation system amid an aging population; Adjust the targeting of welfare support to only the most vulnerable; Improve Government efficiency by abolishing redundant agencies and consolidating overlapping departments.
Scoop
18-05-2025
- Business
- Scoop
A Pathway To Surplus: Taxpayers' Union Releases Blueprint For Government To Cut Spending Deficit
Press Release – Taxpayers' Union The report proposes a range of measures, including more targeted welfare spending, phasing out ineffective corporate subsidies, assessing state-owned enterprises for possible privatisation, and streamlining the public sector by eliminating overlapping … The New Zealand Taxpayers' Union has today launched the second in its series of briefing papers aimed at addressing the government's spending deficit. TitledA Pathway to Surplus, the paper outlines more than $35 billion in potential savings and over $100 billion in possible asset sales. The release follows widespread concern expressed by New Zealanders during the Taxpayers' Union's Hīkoi for Balanced Budgets, which concluded yesterday. 'From Whangārei to Invercargill, people asked us the same question: how can the Government stop the debt from rising?' said Taxpayers' Union Executive Director Jordan Williams. 'This report contains the answers. It offers Finance Minister Nicola Willis oven-ready options to smash the deficit, stop the borrowing debt, and restore New Zealand's financial resilience.' The report proposes a range of measures, including more targeted welfare spending, phasing out ineffective corporate subsidies, assessing state-owned enterprises for possible privatisation, and streamlining the public sector by eliminating overlapping bureaucracy. 'You don't have to agree with every proposal in the paper, and that's okay. But tough conversations and bold decisions are necessary. This paper makes the case for those decisions.' 'None of the ideas are radical. They are pragmatic, evidence-based recommendations rooted in fiscal common sense.' While each recommendation is presented as an option, the paper stresses that inaction is not. 'New Zealanders deserve better than business as usual,' said Williams. 'We owe it to future generations to make the hard choices now while we still can. The pathway to surplus is clear. It's time for our leaders to take it.' The report's key recommendations include: Selling down assets making a poor (or negative) return, allowing the Crown to recycle capital and build quality infrastructure; Reversing index-free student loans and free tuition policies; Raising the pension age and indexing to life expectancy to sustain the Superannuation system amid an aging population; Adjust the targeting of welfare support to only the most vulnerable; Improve Government efficiency by abolishing redundant agencies and consolidating overlapping departments.
News18
18-05-2025
- Business
- News18
Want To Support Your Retired Mother? SCSS Lets You Gift Rs 30 Lakh Without Any Tax
Last Updated: SCSS: Any gift from a son or daughter to their senior citizen mother for investment in SCSS is tax-free under Section 56 of the Income Tax Act. SCSS: A Win-Win for Tax Saving and Retirement Planning SCSS: Planning to secure your mother's retirement while looking for an option to save taxes as well. You can gift your senior citizen mother up to Rs. 30 lakhs for investment in the Senior Citizens' Savings Scheme (SCSS) FDR. This regular interest income helps her stay self-reliant in her old age. CA Kinjal Shah, Secretary BCAS has decoded SCSS scheme and its tax implications. Senior Citizens' Savings Scheme (SCSS) – Key Highlights SCSS is a government-backed fixed deposit scheme offering assured returns for senior citizens. Eligibility: – Individuals aged 60 years and above. – Individuals aged 55-60 years who have retired under Superannuation, VRS, or Special VRS. – Retired Defence Services personnel aged 50 years and above (excluding civilian employees). The account can be opened individually or jointly with a spouse. You can deposit a minimum of Rs 1,000 and a maximum of Rs 30 lakhs, in multiples of Rs 1,000. The tenure is 5 years from the date of account opening. The account can be extended for an additional 3 years after maturity. Interest is payable quarterly on the first working day of April, July, October, and January. Interest does not accrue further if it is not claimed. The account can be closed prematurely after one year, subject to specific conditions. Investment Deduction (Section 80C): Deduction up to ₹1.50 lakhs is available in the year of investment. Interest Income: The interest income is taxable. Interest Deduction (Section 80TTB): Deduction up to ₹50,000 can be claimed on the total interest earned from deposits in banks, post offices, etc., including SCSS. Tax Implications Under SCSS Any gift from a son or daughter to their senior citizen mother for investment in SCSS is tax-free under Section 56 of the Income Tax Act. How to Open an Account SCSS accounts can be opened at public and private sector banks or post offices. To open an account, fill out the application form and submit your PAN card, address proof, and passport-size photographs. Deposits below ₹1 lakh can be made in cash, while amounts above ₹1 lakh must be made by cheque. Upon successful submission, an SCSS account will be opened, and a passbook will be provided. First Published: May 18, 2025, 11:18 IST
NZ Herald
13-05-2025
- Business
- NZ Herald
Finance Minister Nicola Willis signals KiwiSaver changes amidst Superfund withdrawal announcement
'[Changes will be positive] because I want to see people's KiwiSaver balances grow. KiwiSaver has become particularly important for those saving to buy their first home – we had more than 40,000 people use KiwiSaver to do that in the past year," she told Hosking. 'And it's become an increasingly important supplement for people's retirement income.' Willis announced yesterday that the Government was forecast to make its first withdrawal from the NZ Super Fund in 2028, five years earlier than forecast at last year's Budget. The fund was set up in 2001 to subsidise the future cost of Superannuation, easing the burden on taxpayers. The date of the withdrawal – forecast to total $32m in 2028 – isn't at the Government's discretion and is written into the Fund's governing legislation. The first withdrawal would be followed by some 'bouncing around between withdrawals and contributions', but from 2031 onwards, withdrawals were expected every year, Willis said yesterday. Despite withdrawals, the Super Fund won't shrink in the short-term. It will continue growing for some time as withdrawals will be smaller than the overall growth in the fund, the Herald reported yesterday. Treasury's forecasts, which were based on a complicated formula relating to how much is in the fund, GDP, taxpayer numbers and other factors, confirmed help was needed to pay for superannuation, Willis told Hosking this morning. 'We've all talked for several years about at a certain point, the cost of superannuation will get very high, and then we'll need the Super Fund to help. We're now at that point.' Asked how much of the cost of superannuation the fund would cover 'in its golden moments', Willis told Hosking: 'In its golden moments it's only going to be about 20% of the total cost'. 'There's no getting away from the fact that superannuation is very expensive … just in the next few years, it's going to leap up to $29 billion a year, because there are a lot of people over the age of 65 and superannuation is pegged to the after-tax average wage, so that number keeps going up. 'That's the commitment that we have as a country, is to fund that entitlement, and we then need to pay for it. And there are fewer taxpayers, of course, in the future to help pay for it.'
