KiwiSaver Act 2006 miscellaneous provisions including consent for electronic transactions, direct credit refunds, the role of and information obtained by the CIR.
Consent to electronic transactions
A person who gives his or her electronic address is treated under the Act as having consented to accept information in an electronic form. In the case of investment statements, however, a hard copy must be sent if the person has provided a street address or post office box number.
Refunds made by direct credit to a bank account
Section 221 specifies that refunds of KiwiSaver contributions must be made by direct credit to a bank account nominated by the person entitled to the refund. When a person claims a refund, the person must provide the Commissioner with the particulars of a bank account in New Zealand that the direct credit is to be made to. However, if the Commissioner is satisfied that payment by direct credit would result in undue hardship to a person or is not practicable, a refund may be made by other means acceptable to the Commissioner.
A "bank account" is defined as an account with a registered bank within the meaning of the Reserve Bank Act 1989, a private savings bank, a credit union, a building society or the PSIS Limited.
Role of the Commissioner
Section 222 gives the Commissioner the function of ensuring oversight of the provisions that are administered by Inland Revenue under section 224. Without limitation, this includes the functions and powers of:
- requiring persons affected by the Act to verify certain matters with the Commissioner as requested; and
- requiring persons to give notice to the Commissioner to ensure that the Act is complied with.
Use of information by the Commissioner obtained under the Act and other Inland Revenue Acts
Section 223 specifies that despite anything in any other Act, nothing prevents the Commissioner or any officer of Inland Revenue from:
- using information obtained under the Act for the purposes of carrying into effect any of the Inland Revenue Acts; or
- using information obtained under any of the Inland Revenue Acts for the purposes of carrying into effect the provisions of the Act.
Section 208 outlines certain limits to the application of section 223.
Administration of the Act
Section 224 specifies that Parts 1 to 3 and Schedule 3 of the Act are administered by Inland Revenue. Part 4 and Schedules 1 and 2 are administered in the particular department of State that has been delegated responsibility by the Prime Minister.18 Part 5 is administered in the department of State that has been delegated responsibility by the Prime Minister, and different departments may be authorised to administer different sections.19
Section 225 enables a fee subsidy to be paid to a member of a KiwiSaver scheme. The Act allows regulations to be made prescribing the amount of the fee subsidy and the manner in which it is paid. It is the government's intention that the fee subsidy be paid as a contribution to the member's account.
Section 226 specifies that the Crown must pay a contribution to the first KiwiSaver scheme of which a person is a member:
- as soon as practicable three months after the Commissioner receives the first contribution for that person, in the case of a person that subpart 1 of Part 3 applies (to a person that is required to have deductions of contributions from salary or wages);
- as soon as practicable after three months after the Commissioner is given notice that the person is a member of the KiwiSaver scheme, for any other case.
The amount of the contribution will be $1,000 or an amount prescribed by the Governor-General by Order in Council. The provider must credit this contribution on a pro rata basis across the investment products of the KiwiSaver scheme to which the person has subscribed or been allocated. Each member is only entitled to one such contribution. If a person ceases to be a member of a KiwiSaver scheme and subsequently becomes a member of another KiwiSaver scheme, they will not be entitled to another Crown contribution.
Status of fee subsidy and Crown contribution for tax purposes
Section 227 states that the Crown contribution and fee subsidy paid by the Crown are not income for the purposes of the Income Tax Act 2004 or a gift for the purposes of the Estate and Gift Duties Act 1968.
Section 228 allows regulations to be made by the Governor-General by Order in Council for a number of purposes, including:
- prescribing forms and specified information or documents to be included or attached to forms;
- prescribing requirements for documents that are sent, given, or delivered and the information that must be included in a notice that is in addition to the information specified in the Act;
- prescribing fees payable to the Commissioner or Financial Markets Authority or the manner in which the fees may be calculated;
- recognising specific foreign superannuation schemes or classes of schemes based in named countries as schemes to which funds can be transferred on permanent emigration;
- prescribing the circumstances for who can qualify for the first home ownership withdrawal provision;
- prescribing the maximum number of default providers that can be appointed;
- specifying what information or matters must be used in information packs;
- providing for operational matters and electronic compatibility between the Commissioner and providers, including requirements for providers to enter into a scheme provider agreement with Inland Revenue and the matters to be included in those agreements;
- providing for the payment of fee subsidies to members or classes of members of KiwiSaver schemes, and the setting of those fee subsidies or the manner by which they may be calculated;
- specifying when fee subsidies will be paid, the terms and conditions relating to payment, their application and how they may be enforced;
- prescribing matters that are relevant to determining whether a fee is unreasonable;
- prescribing matters which may be considered as significant financial hardship; and
- providing any other matters necessary for the Act's administration or for giving it full effect.
Regulations relating to mortgage diversion
Section 229 specifies that the Governor-General may, by Order in Council (on the recommendation of the Minister of Finance), make regulations providing for a mortgage diversion facility that allows contributions to be withdrawn from KiwiSaver schemes and applied towards payment of a mortgage.
The recommendation may be made if the Minister is satisfied that the mortgage diversion facility will be consistent with the following principles:
- there is no compulsion on KiwiSaver scheme providers to provide a mortgage diversion facility;
- there is no compulsion on mortgagees to allow amounts secured by mortgages to be paid via KiwiSaver contributions;
- the facility is available to be used by a member any time after 12 months have expired from the earlier of the date that the Commissioner received the first contribution for the member or the date that the provider received the member's first contribution;
- the facility is available only in relation to a mortgage over the member's principal residence (for example, the family home);
- the mortgage diversion may apply for the remainder of the terms of the mortgage after the diversion is made available;
- after the total amount secured by the mortgage is paid, ongoing contributions are retained automatically in the member's KiwiSaver account;
- if the member chooses to end the mortgage diversion facility before the mortgage is fully paid, the contributions are redirected towards retirement savings;
- the provider, and not the Commissioner, is responsible for paying the amount diverted under the mortgage diversion facility;
- the diverted amount is capped at no more than half of the member's contribution rate and is a fixed dollar amount;
- employer contributions may not be diverted; and
- the facility is available for new mortgages and existing mortgages.
The regulation may specify all or any of the terms and conditions that apply to the mortgage diversion facility, including:
- which types of mortgages qualify;
- what a scheme must do to participate;
- how the regulations affect the scheme's trust deed;
- what happens if the scheme decides to terminate participation;
- whether payment via the facility counts as payment by the mortgagor for the purpose of the terms of the mortgage; and
- any other matters.
If a provider chooses to participate in the mortgage diversion facility, any withdrawal made in accordance with those regulations will be treated as a withdrawal permitted under the KiwiSaver scheme rules.
Section 232 specifies that as a transitional measure all contributions must be paid to the Commissioner for the first three months after the automatic enrolment rules have come into effect. No provider may accept contributions in the first three months.
18 Ministry of Economic Development has been delegated responsibility for these provisions.
19 Inland Revenue has been delegated responsibility for sections 207, 208, 211 to 218, 221 to 224, 226, 227, 229, 231 and 232 and the Ministry of Economic Development has been delegated responsibility for sections 205, 206, 209, 210, 219, 220, 225, 228 and 230.