Interest

Interest will be calculated on each anniversary of the funds being accepted into the Government account and compounded until the end of the five-year investment period or until the date of withdrawal if you request to withdraw all your funds before the end of the five years.  If applicable, resident withholding tax will be deducted and paid to Inland Revenue at the time interest is calculated.

Rate of interest

The rate of interest is based on the rate of inflation, which is measured by the All Groups Consumers Price Index (CPI), as published by Statistics New Zealand.  The CPI for the latest quarter is normally published in the month following the quarter-end date.

 

If the CPI is not published for any quarter or if publication is delayed until after the date when interest is determined, the CPI published for the previous quarter will apply, with a similar adjustment to the end of the quarter (Q_end).  If Statistics New Zealand ceases to publish the CPI, the Crown will elect an alternative measure of inflation to be used to calculate interest.

 

If the reference base of the CPI is changed after the deposit date, the index used for the purposes of calculating interest will be the CPI numbers expressed on the new base as published by Statistics New Zealand.

 

Deflation

The return of your principal is guaranteed and will be paid at the end of the investment period or sooner if you request to withdraw all your funds before then.  If there is a period of sustained deflation and at the end of the five years the total payment to you (including your interest) is less than the original investment, then we will adjust your interest so that the interest plus the principal equals the original investment (minus any previous repayments made as a result of having a business plan approved).

 

Partial withdrawal of principal (for business plans)

Each principal repayment during the annual period for which interest will be calculated requires a separate calculation.  If you withdraw funds to invest in a business, any interim return, less any payment to the Inland Revenue Department, will be compounded at the end of the annual period relevant to the calculated interest.