5 May 2020
Mr M. P. Ross
[FYI request #12564 email]
Dear Mr Ross
Thank you for your request made under the Official Information Act 1982 (OIA), received
on 8 April 2020. You requested the following:
1) The total annual amount of tax paid (NZD) to the IRD for each of the past 5 years
from all KiwiSaver contributions.
2) The total annual amount of tax paid (NZD) to the IRD for each of the past 5 years
from all KiwiSaver investment income.
3) What was this tax in questions 1 and 2, used for and used by whom?
4) Was the tax collected in Q1 and 2) reinvested, and if so, what was its result(s)? ($)
5) If a KiwiSaver account makes income and is then rightful y taxed at the correct
level, then that KiwiSaver investments value reduces to below the level of
contributions made. Then eventually (one day) goes back into a positive balance
but not to the level of the first peak, are you taxed again (double dip tax) on that
so-cal ed income, which you have already paid for previously?
I have answered each of your questions separately below.
The total annual amount of tax paid (NZD) to the IRD for each of the past 5
years from al KiwiSaver contributions.
Employer Superannuation Contribution Tax is a tax deducted from al employer
superannuation contributions. This includes superannuation schemes other than KiwiSaver
schemes. Consequently, the figures reported here wil overstate the tax related to
KiwiSaver contributions. Additional y, contributions made by the member are made from
post-tax income. As the information you have requested is not held by Inland Revenue, I
regret that I must refuse this part of your request under section 18(g) of the OIA.
However, I can provide information on the Employer Superannuation Contribution Tax.
Please find this information in the table below:
Year ending 31 March Employer Superannuation Contribution
Question 2. The total annual amount of tax paid (NZD) to the IRD for each of the past 5
years from all KiwiSaver investment income.
Please find the requested information in the table below:
Year ending 31 March
Tax on KiwiSaver PIE investments
Tax on KiwiSaver portfolio investment entity (PIE) investments includes tax paid on
investment income upstream of the PIE (e.g. imputation credits on dividend income or
resident withholding tax paid on interest income) and tax paid by the KiwiSaver PIE on
behalf of the investor.
What was this tax in questions 1 and 2, used for and used by whom?
Tax collected from KiwiSaver investment income is receipted to the Crown’s consolidated
account along with revenue received from other sources. In this way, tax revenue from all
sources comes together and forms a singular “pool” of funds. Once tax revenue from all
sources has been combined, the origin of one dollar cannot be distinguished from another,
making it impossible for money to be traced from source to expenditure.
As the information which you have requested is not held by Inland Revenue, I regret that
I must refuse this part of your request under section 18(g) of the OIA.
However, if you wish to know more about the application of tax revenue, you can review
the Government’s Financial Statements. These are available on the Treasury website
(treasury.govt.nz/publications/year-end/financial-statements-2019) and set out the
destination of Government spending in some detail. For example, in the 2018/19 financial
year, the three largest areas of total Crown expenditure were:
• social security and welfare ($28.8 billion);
• health ($18.3 billion); and
• education ($14.3 billion).
Question 4. Was the tax col ected in Q1 and 2) reinvested, and if so, what was its
I regret that I must refuse this part of your request under section 18(g) of the OIA for the
same reason as that given above; namely, that this information is not held by Inland
Revenue. I refer you to my answer to question three (3) for further detail.
Question 5. If a KiwiSaver account makes income and is then rightful y taxed at the
correct level, then that KiwiSaver investments value reduces to below the level of
contributions made. Then eventual y (one day) goes back into a positive balance but not
to the level of the first peak, are you taxed again (double dip tax) on that so-called income,
which you have already paid for previously?
It is first important to distinguish between income and capital. Income is typically defined
as the product of capital, while capital is generally understood as the underlying asset
which produces or generates income for the holder. This distinction is important for tax
purposes as, unlike many countries, New Zealand does not have a comprehensive capital
gains tax. This means that while income is taxable in the hands of the recipient, increases
in the value of capital are (with some exceptions) not subject to taxation.
Typical y, neither capital gains, nor the value of the capital at the beginning of the financial
year, are taxed. However, the capital value of offshore investments which the portfolio
investment entity (PIE) holds may be used for the purpose of calculating deemed income
on foreign investments.
A KiwiSaver scheme is a PIE. A member of a KiwiSaver scheme wil usual y own units in
the PIE which are linked to assets (e.g. shares, bonds, property, etc). There are
exceptions, such as Kiwi Wealth, that do not assign units in a scheme. Instead,
contributions are invested into the chosen investment fund(s).
Units can increase or decrease in value in line with market and company performance.
Where these units generate income (for example, in the form of dividends), this income
wil be subject to tax at the KiwiSaver member’s prescribed investor rate (PIR). However,
any increase in the value of the underlying unit would represent a capital gain and would
therefore not be subject to taxation.
As a simplified example, suppose the following:
A KiwiSaver member invests $10,000 from employee and employer contributions
through a KiwiSaver member’s PIE scheme. These funds are used to buy units
linked to a number of different assets. Following disruption in international markets,
the value of these units goes down and the balance of the KiwiSaver account is
now $7,000. After 6 months the market has stabilised, and the value of these same
units is now $9,500. As it is the value of the underlying assets that has increased
the member will not be liable to tax on the $2,500 capital gain.
Suppose that after another 6 months, the value of the units held by the KiwiSaver
member is now $11,000. As before, because the value of the underlying asset has
increased there is no tax due on this $1,500 balance increase. As with the example
above, tax is not levied on the value of the capital or on any increase or decrease
in its value over the financial year.
At the end of the financial year one of the New Zealand companies which the
KiwiSaver scheme has invested in pays dividends which contribute $500 to the
balance of the KiwiSaver account, bringing the total to $11,500. As dividends are
considered income, the $500 wil be assessed to tax at the KiwiSaver member’s
Right of Review
If you disagree with my decision on your OIA request, you can ask an Inland Revenue
review officer to review my decision. To ask for an internal review, please email the
Commissioner of Inland Revenue at: [email address].
Alternatively, under section 28(3) of the OIA, you have the right to ask the Ombudsman
to investigate and review my decision. You can contact the office of the Ombudsman by
email at: [email address].
Thank you for your request. I trust that the information provided is of assistance to you.