Use-of-money interest on KiwiSaver refunds
2010 legislation amends use-of-money interest on KiwiSaver refunds. Applies for 2010-11 and future tax years.
Inland Revenue pays use-of-money interest (UOMI) on money refunded to KiwiSaver members - for example, a member's personal contributions if they subsequently opt out. UOMI paid by Inland Revenue on KiwiSaver contributions is exempt income for tax purposes. The interest is calculated net of tax. The net-of-tax calculation is based on the lowest tax rate for individuals.
Section 86(1) has been amended, consequential to the 1 October 2010 personal tax rate changes, to ensure that the UOMI rate continues to be calculated and paid at 12.5% until 30 September 2010, and then 10.5% from 1 October 2010.
The amendment applies for 2010-11 and future tax years.