How to make the most of tax changes from Budget 2024
29 October 2024
The tax changes from Budget 2024 have brought some relief to households throughout Aotearoa. Kiwis might use this extra money to cover their increased living expenses – but if you’re able to increase your savings by a small amount, it can make a big difference over time.
Scenarios
We have two scenarios by age group to see how a small contribution can make a big difference to your KiwiSaver balance over time.
Sandeep’s choice
Sandeep, 25, has an annual before-tax income of $70,000 – and according to the recent Budget 2024 Tax Calculator, is expected to receive an extra $30.75 in his bank account each fortnight. Sandeep has noticed his grocery, petrol, and other costs have been steadily going up. He’s looking to put most of the extra after-tax income straight towards supporting his living costs.
On the other hand, Sandeep has his future to think about. While this boost will certainly help in the present, he knows that making small steps along the way is important to ensuring he has a large enough nest egg for when he eventually reaches retirement. So, he makes a plan.
Out of the total $30.75 fortnightly boost, Sandeep decides to set up an automatic payment of $15 each fortnight into his KiwiSaver account, on top of his existing 3% employee contribution.
At first, Sandeep doesn’t think this small fortnightly top up will amount to much – but after using the KiwiSaver account calculator, he realises that thanks to compound returns, investing an extra $15 per fortnight could add an additional $25,000 to his KiwiSaver balance by the time he’s 65.
This goes to show that small steps now, wherever possible, can make a difference over the long run.
Disclaimer: graph is for the purpose of illustrating the impact of additional voluntary contributions only, and doesn’t account for inflation or any possible fees, taxes, withdrawals or existing voluntary contributions. It also doesn't account for any possible contributions or returns prior to age 25. Returns are not guaranteed, will depend on many factors and may be negative as well as positive.
Line graph text description
Horizontal axis shows Sandeep’s age, starting at 25 and ending at 65.
Vertical axis is labelled 'Balance' and shows values from zero to $350,000.
Lines for the above example start at $0.
A line marked ‘Employee, Employer & Government contributions’ finishes at $273,000 after trending steadily up.
A line marked ‘Additional voluntary contributions’ finishes at $298,000 after trending steadily up. This is a difference of $25,000, on top of the line marked ‘Employee, Employer & Government contributions’.
Scenario assumptions
Sandeep’s story is an example to help you understand how your choices can make a difference to your KiwiSaver savings. The figures used are for illustration only and may not reflect actual returns.
The Budget 2024 Tax Calculator and the KiwiSaver account calculator each have their own sets of assumptions which drive the calculations. Make sure you’ve reviewed both, so you understand how the amounts in the scenario above have been calculated.
Our scenario assumes that Sandeep is currently invested in the OneAnswer KiwiSaver Scheme Growth Fund, in the Lifetimes option. The scenario has also been calculated in October 2024 based on a $30 voluntary contribution per calendar month.
Ana’s choice
Ana, 40, has an annual before-tax income of $93,000 – and according to the Budget 2024 Tax Calculator, is expected to receive an extra $40.10 in her bank account each fortnight. Ana has noticed her grocery, petrol, and other costs have been steadily going up. She’s looking to put most of the extra after-tax income straight towards supporting her living costs.
On the other hand, Ana has her future to think about. While this boost will certainly help in the present, she knows that making small steps along the way is important to ensuring she has a large enough nest egg for when she eventually reaches retirement. So, she makes a plan.
Out of the total $40.10 fortnightly boost, Ana decides to set up an automatic payment of $20 each fortnight into her KiwiSaver account.
At first, Ana doesn’t think this small fortnightly top up will amount to much – but after using the KiwiSaver account calculator, she realises that thanks to compound returns, investing just $20 per fortnight could result in an additional $16,000 in her KiwiSaver account by the time she’s 65.
This goes to show that small steps now, wherever possible, can make a difference over the long run.
Disclaimer: graph is for the purpose of illustrating the impact of additional voluntary contributions only, and doesn’t account for inflation or any possible fees, taxes, withdrawals or existing voluntary contributions. It also doesn't account for any possible contributions or returns prior to age 40. Returns are not guaranteed, will depend on many factors and may be negative as well as positive.
Line graph text description
Horizontal axis shows Ana’s age, starting at 40 and ending at 65.
Vertical axis is labelled 'Balance' and shows values from zero to $200,000.
Lines for the above example start at $0.
A line marked ‘Employee, Employer & Government contributions’ finishes at $171,000 after trending steadily up.
A line marked ‘Additional voluntary contributions’ finishes at $187,000 after trending steadily up. This is a difference of $16,000, on top of the line marked ‘Employee, Employer & Government contributions’.
Scenario assumptions
Ana’s story is an example to help you understand how your choices can make a difference to your KiwiSaver savings. The figures used are for illustration only and may not reflect actual returns.
The Budget 2024 Tax Calculator and the KiwiSaver account calculator each have their own sets of assumptions which drive the calculations. Make sure you’ve reviewed both, so you understand how the amounts in the scenario above have been calculated.
Our scenario assumes that Ana is currently invested in the OneAnswer KiwiSaver Scheme Balanced Growth Fund, in the Lifetimes option. The scenario has also been calculated in October 2024 based on a $40 voluntary contribution per calendar month.
Important information
ANZ New Zealand Investments Limited is the issuer and manager of the ANZ KiwiSaver Scheme, the ANZ Default KiwiSaver Scheme, the OneAnswer KiwiSaver Scheme, the ANZ Investment Funds, the OneAnswer Multi-Asset-Class Funds and the OneAnswer Single-Asset-Class Funds.
Important information is available under terms and conditions. Download the guide and product disclosure statement.
This information is prepared by ANZ New Zealand Investments Limited for information purposes only.
We recommend seeking financial advice about your situation and goals before getting a financial product. Please talk to your financial adviser if you need financial advice. If you don’t have a financial adviser, please contact us and we will put you in touch with one.
Past performance does not indicate future performance. The actual performance realised by any given investor will depend on many things, is not guaranteed, and may be negative as well as positive.
While we’ve taken care to ensure the information is reliable, we don’t warrant its accuracy, completeness, or suitability for your intended use. To the extent the law allows, we don’t accept any responsibility or liability arising from your use of or reliance on this information.