Superannuation Revisited

Question

Have been reading your column re super and an "included" spouse, and have a question. If the amount earned above $80 per week has 70c/$ taken out  - is the whole amount earned taxed or just the $80. Using the assumed $12000 earned in your column it seems that 65.25% would be taken leaving an amount of $4172.

Just wondering as the tax of 19.5% would be taken out by the bank unless notified otherwise.

Answer

The personal resident withholding tax (RWT) rate you elect will be deducted at either 19.50%, 33.00% or 39.00% provided you supply a tax number on the investment application by the provider of the investment. Of course if you do not provide the IRD number the rate is the higher 39.00%.
 
The abatement referred to is not actioned via the RWT regime. In practical terms if you are drawing Super and have an 'included' spouse you will be invited to complete an annual declaration by Winz. At this point the other income becomes an issue. You can earn up to $80.00 per week gross or before tax ($4,160 per annum gross) at which point no abatement will take place.
 
For every dollar above that level Winz will reduce only the ongoing included spouse benefit by 70c in the dollar. When you complete your annual declaration all income details need to be provided and Winz ask you to provide bank statements etc in support of your declaration. It is important to be aware that an interest in any income from a family trust or capital payments received that are regular in nature can also be deemed or considered income with respect this area of concern.
 
Just for clarification, the Winz invite to complete the annual declaration is not optional! Roll on 65 - eh?

Original Article published June 2006