Push to insurance to be included in KiwiSaver
The government is being urged to bring tax rules on life insurance policies in line with the Australian approach – in a way which would allow insurance to be bolted on to KiwiSaver.
Thursday, November 15th 2007, 6:55AM
by Rob Hosking
Deloitte tax partner Greg Haddon says the proposals thus far are similar to what is done in Australia – but they should go further.
The tax concession for earnings form superannuation funds in Australia is also applied to earnings by life policies.
The result, Haddon told a recent Institute of Chartered Accountants' tax conference, is that last year the country's superannuation business contributed to 90% of all new premiums.
The IRD proposals are aimed at bringing life policies into a tax regime as similar to the PIE regime for superannuation funds as possible.
The tax benefits of the PIE regime would not, under the current proposals, pass through to policyholders unless the policy is index linked.
"Therefore unless the life insurance rules can be amended to pass these benefits through we are unlikely to see the same growth of investment products as experienced Australia."
Investment Savings and Insurance Association chief executive Vance Arkinstall says the ISI has suggested something along these lines to the government.
"We've made some fairly strong representations to officials along those lines and we are still waiting for a formal response.
"We think it is quite logical to have insurance products included in the range of KiwiSaver products."
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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