MIL OSI – Source: Inland Revenue Department – KiwiSaver HomeStart Bill passes
The Taxation (KiwiSaver HomeStart and Remedial Matters) Bill passed its third reading today and now awaits Royal assent.
Building and Housing Minister Dr Nick Smith and Revenue Minister Todd McClay today welcomed Parliament’s passage of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill, which will allow eligible KiwiSaver members to access more of their KiwiSaver funds to purchase their first home.
“These changes to KiwiSaver and the new HomeStart grant will open the door for 90,000 young New Zealanders over the next five years to own their own home,” Dr Smith says.
“The passage of this Bill will extend the current KiwiSaver withdrawal rules for first home buyers, so that eligible KiwiSaver members will be able to withdraw the annual member tax credit paid by the Government as well as their own contributions and those made by their employers,” Mr McClay says.
This means that eligible KiwiSaver members will now have access to up to an extra $521 for each year they have contributed to the scheme to put towards the deposit on their first home.
“Often, the biggest challenge faced by prospective first home buyers is pulling together the deposit. The measures contained in this Bill will provide a welcome boost,” Mr McClay says.
The Government’s $1,000 kick-start is not included in the changes in order to keep the KiwiSaver member’s account open and active after the withdrawal of eligible funds.
The Bill implements one part of the Government’s new support package for first home buyers which was announced in August 2014. The KiwiSaver HomeStart package, which comes into effect 1 April, also includes:
- A doubling of the support for first home buyers where they are purchasing a newly built home;
- Increasing the house price caps to the more realistic levels of $550,000 in Auckland, $450,000 in Wellington, Christchurch and other areas facing housing affordability issues and $350,000 in the rest of New Zealand; and
- Expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart grant.
Other refinements made to the KiwiSaver scheme in this Bill include:
- The law has been amended in response to concern from the Māori Party, to enable a KiwiSaver first home withdrawal to apply to the building or purchase of a home on Māori land;
- The law has been clarified so that a KiwiSaver first home withdrawal can be used for the purchase or building of a home in New Zealand only;
- The law has been amended so that from 1 June 2015, the KiwiSaver first home withdrawal can be used for making an initial deposit on a home, provided the funds are protected until settlement. The current law does not enable withdrawals to be used for a deposit, which creates a barrier particularly for new homes purchased off the plans; and
- The KiwiSaver HomeStart grant policy has been revised to allow greater flexibility for new builds in the time to completion because the timeframes announced in August were unrealistic for some apartment and townhouse developments.
“HomeStart is the most significant Government support for first home buyers in more than a generation and comes into effect on 1 April 2015. These changes double the Government’s support for first home buyers from $217 million to $435 million over the next five years. It complements the Government’s other housing initiatives, including opening up new residential land, reducing tariffs on building materials, investing more in building skills and reducing compliance costs,” Dr Smith says.
The Bill also makes changes to clarify and correct the tax rules for payments made under the Veterans’ Support Act 2014.