Lotu-Iiga Sam: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — First ReadingText is incorporated into the Bound VolumeLotu-Iiga Sam: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — First Reading[Sitting date: 04 December 2014. Volume:702;Page:1178. Text is incorporated into the Bound Volume.]Hon Peseta SAM LOTU-IIGA (Minister of Corrections)on behalf of theMinister of Revenue: I move That the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported by 28 April 2015.The purpose of this bill is twofold. First it supports the Government’s $218 million HomeStart package of proposals to provide greater assistance to New Zealanders saving to buy their first home. Second it continues the Government’s focus on ensuring that the tax rules apply consistently and fairly—in this instance by ensuring that recently enacted rules relating to the entitlement scheme for veterans function smoothly from a taxation perspective. The main feature of the bill deals with one of the biggest hurdles for first-home buyers: acquiring the necessary deposit to purchase a home. For this reason as part of the HomeStart package announced by the Government in August this bill proposes to extend the current KiwiSaver withdrawal rules for first-home buyers from 1 April 2015.Under the current rules KiwiSaver members who are purchasing their first home are able to withdraw the contributions that they and their employer have made to supplement a deposit on a first home. The proposals in this bill will allow them to also withdraw their member tax credit. This will give these KiwiSaver members access to an extra $521 for each year the member has contributed to the scheme. They will not however be able to withdraw the Government’s $1000 kick-start contribution. This is a pragmatic decision so that a member’s KiwiSaver account remains open and active after the withdrawal of eligible funds.The second part of the bill introduces several small amendments to the Income Tax Act 2007 and the KiwiSaver Act 2006 to ensure that income replacement payments made to New Zealand veterans are taxed correctly. These amendments are necessary to clarify the tax rules following recent changes introduced by the Veterans’ Support Act 2014 which replaces the now outdated War Pensions Act 1954. The rules proposed in this bill make it clear that income replacement payments for veterans will be treated in the same way as ACC compensation payments for taxation social policy and KiwiSaver purposes. In other words these payments to veterans will be treated as taxable income and will be taken into account for social policy calculations such as when applying for Working for Families tax credits.The amendments also clarify that these payments will not be subject to the KiwiSaver automatic enrolment rules or compulsory employer contributions. Proposed changes will take effect from the date of enactment and are important in order to give veterans who are receiving income replacement payments clarity on the correct tax treatment of these payments. These are the principal changes proposed in this bill.For aspiring homeowners the proposed changes to KiwiSaver will provide a welcome boost towards acquiring the deposit for their first home. For veterans receiving certain payments in recognition of their service to New Zealand the proposed changes clarify the tax rules and provide a consistent approach to such payments across the tax and social policy systems. I now commend the bill to the House.