Make sure you understand the rules and talk to your accountant before you join a KiwiSaver scheme.
How does KiwiSaver work?
KiwiSaver for the self-employed
KiwiSaver’s slightly different for self-employed people.
The government will still kick-start your savings with a $1000 tax-free lump sum and give you a tax credit of up to $10 a week ($521 a year).
But unless your business pays you a salary or wage from which PAYE is deducted, you won’t have to contribute the fixed 2%, 4% or 8% of your income that employees have to. Instead, you'll agree with your provider how much you'll pay into the scheme and how often, and you'll need to make the contributions yourself.
You can find out more about how KiwiSaver works for the self employed from www.kiwisaver.govt.nz. Make sure you understand the rules and talk to your accountant before you join a KiwiSaver scheme.
Some issues to discuss with your accountant are:
- Does it make sense to join KiwiSaver – or are you better off putting that money into developing your business?
- If you decide to join, how much should you contribute?
- How often should you pay in? You and your accountant need to look at your cash flow and decide whether regular fortnightly or monthly contributions are manageable or whether you should pay once or twice a year. Make sure any lump sums don’t clash with your GST and provisional tax payments or any other large annual payments, such as insurance.
- Are there any tax advantages for you? Is changing to a company structure worthwhile for other reasons apart from KiwiSaver?
Important
Like you, we can't predict the future - which means we can't guarantee the performance of any savings scheme. Nor do we endorse any specific KiwiSaver provider or scheme. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.
