Kiwibank launches tax-saver investment accounts
04/06/2008
Kiwibank has launched new savings accounts that provide substantially higher returns on investments, including a Term Deposit account offering an effective rate of more than 10% for those in the highest tax bracket.
The accounts take advantage of the Portfolio Investment Entities (PIE) legislation that limits tax on interest to 30%. With conventional accounts, tax on interest is 33% or 39% depending on the customer's income.
Kiwibank Chief Executive Sam Knowles said the PIE schemes effectively change the face of bank deposits in New Zealand. "These new accounts give people the safety of having their money in the bank, but the added advantage of paying less tax on the money they make."
"The Government passed the PIE legislation to give people a greater incentive to save. Now they can do so with Kiwibank and have confidence in the interest rate they can achieve and take the option of having their savings on call 24 hours a day or fixed for a set term."
Kiwibank is offering a premium Term Deposit for 150 days that can provide an effective interest rate of more than 10%.
"While the quoted rate is 8.85%, this is equivalent to a before-tax rate of 10.15% on an ordinary term deposit for 39% taxpayers", Mr Knowles said.
The Kiwibank PIE options also include an Online Call investment with an interest rate of 8.30% (provided no withdrawals are made during a month). This equates to a rate of 9.50% to an investor in the 39% tax bracket.
The new accounts are technically different to regular deposits but the security is the same as any other deposits with Kiwibank. The PIE schemes are unit trusts, managed by a wholly-owned subsidiary of Kiwibank and invested in Kiwibank deposits.
For further information:
Kiwibank Communications Manager
Bruce Thompson (04) 460 6831