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Not On For Employers To Pay Less Yet Claim Tax Credit - Clark

Contributor:
Fuseworks Media
Fuseworks Media

Labour Minister Trevor Mallard has confirmed the
Department of Labour is investigating claims that employers are paying
less to workers in KiwiSaver while still claiming the tax credit.

Mr Mallard said it appeared some employers were offering employees who had joined KiwiSaver pay increases that were 1 per cent lower than those given to non-KiwiSaver workers, ostensibly to cover the employer contribution to the scheme.

The employers could then benefit by pocketing the Government's tax credit.

"Employers are getting a tax credit of $20 a week, which will
fully compensate for the 1 percent employer contribution for employees
who are on a salary of up to $104,000," Mr Mallard told the Weekend
Herald.

"Therefore, any suggestion that employees also have to cover
this employer contribution through their remuneration is unethical."

Miss Clark told reporters today she backed what Mr Mallard was
saying, particularly given that employers were getting a tax credit for
their contribution.

"Where the employee has chosen to go into the scheme, I don't
think it's on to be deducting the employer contribution from any
consideration of a wage increase," she said.

Mr Mallard would not name the employers who had been accused in
letters sent to him, but he said he thought there were about three
companies.

He said the Department of Labour was looking into whether the
actions amounted to a breach of good faith under the Employment
Relations Act, which carried fines of up to $10,000.

Mr Mallard said he might have to consider whether rules were needed to stop the practice.

The Employers and Manufacturers Association said today the Government was causing unnecessary confusion over the issue.

"The KiwiSaver legislation specifically allows employers to implement KiwiSaver in the way the Government is now criticising," EMA (Northern) employment services manager David Lowe said.

"Employer contributions are specifically allowed to be included in an employee's wages as part of their total remuneration."

Allowing employer contributions to be included in an employee's
wages enables employers to address the inequity that would result for
those who joined KiwiSaver getting additional workplace benefits to those who did not join, Mr Lowe said.

"That same law also provides a tax credit for both employers and employees.

"Employers are now being criticised for not handing their tax
credit to employees when they have already received their own tax
credit."

Mr Lowe said reports that the Government was considering
changing its mind in the wake of union pressure were most unhelpful.
"What's more, let's not forget there are employers who are supporting KiwiSaver
by giving all their staff a pay rise that makes the employees' 4
percent contributions affordable for those who join the scheme, and is
a pay increase for those who don't join."

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