Super savings taxed: Nasfund


SAVINGS for superannuation fund members are taxed before being paid as the employers’ contribution component, says National Superannuation Fund (Nasfund) chief executive officer Ian Tarutia.
He said superfunds were required to tax this component and interests earned from the savings.
“There are two components of a member’s contribution that come into the fund – the member’s and the employer’s. The member’s contribution is already taxed by the employer and passed onto the government,” Tarutia said.
“The employer’s contribution is not taxed as it is a concessional tax. When the contribution comes to the fund, we invest the money. When it is time to pay out, then we apply that tax on the employer’s contribution as well as the interest that has been earned by the fund.
“There are reductions depending on the years of service. The longer you retain funds in Nasfund the less tax you pay.
“If the funds are here for more than 50 years, you pay only two per cent for the employer’s and interest component.”
Deputy Prime Minister and Treasurer Charles Abel said the government taxation policy aimed to be fair while maintaining reasonable revenue in regards to superannuation tax. “The question comes to the concessional aspect of things and how do we discuss options around that,” he said.
“I am told that our regime is very competitive in a tax sense on superannuation. But let’s look at the facts and figures. Ultimately we want it to be fair and that people have a good incentive to save money.
“If the situation was a bit better economically, it was the intention of the government to increase the tax-free threshold. We wanted to take it up as high as K20,000. But given the circumstance, it was just not possible as it would meant too much of an impact on government revenue.
“I think the solution is not imposing further burden on our people. The solution is administering the current tax regime and making sure that all companies pay their fair share of tax. Part of that as well is having a discussion on the superannuation regime and we are open to that.”