Crown Subsidies for KiwiSaver Members

The Government will make a $1,000 initial contribution to the relevant KiwiSaver scheme for the credit of each new member.
Initially a fee subsidy was paid by the Crown to each member's account. For people who join KiwiSaver from 1 April 2009, there is no fee subsidy. Whilst some KiwiSavers who joined prior to this date may still be eligible to receive a fee subsidy, by 2010 there will be no further payments. Previously, this had been set by regulation at $40 per annum, payable at the rate of $20 per member every six months.
The Government will also provide housing deposit assistance for a member's first home purchase. This is available after three years' membership, at $1,000 per year of contributory membership, up to a maximum of $5,000 after five years. There are limits around household income and the purchase price of the first home.
The $1,000 initial Government contribution is not subject to income or withholding tax or gift duty.
Initially employer contributions up to the lower of the employee's contribution or 2% of the employee's gross salary or wages (4% up to 31 March 2009) will be exempt from Employer Superannuation Contribution Tax - ESCT (formerly called Specified Superannuation Contribution Withholding Tax - SSCWT). Effective 1 April 2012 the ESCT exemption will be removed, and it will be compulsory for all employers to deduct ESCT at the individual KiwiSavers applicable progressive ESCT rates.
Members making contributions to a complying fund are eligible for all the KiwiSaver benefits other than the $1,000 KiwiSaver initial contribution.
Initially member contributions to KiwiSaver schemes and complying superannuation funds, unless the member is under age 18, are matched by a tax credit of up to $1,042.86 per annum (equivalent to $20 per week) that will be paid directly into their KiwiSaver account (or complying superannuation fund). The Member Tax Credit (MTC) is to be paid to 50c for each $1 contributed by members to the new maximum amount of $521.43 per year. This lower maximum amount and MTC rate will apply for MTCs paid for the year ended 30 June 2012 and later years. This includes contributions made to KiwiSaver schemes by the self employed or not employed.