image

KiwiSaver Salary Sacrifice

  • Changes announced in May 2011 mean there is no benefit in using salary sacrifice
  • Salary Sacrifice is a mechanism whereby an employee can benefit from the tax free status of an employers KiwiSaver contribution, at no cost to the employer.
  • This is done by automatically reducing the employee's salary by the amount of the employer contribution.
image

If the employee is salaried there is an additional option in the KiwiSaver section of the Employee Maintenance screen.

image
image

Once activated, note the result of this on the employee pay calculation screen in the example below.

Whilst the employee salary of $52,000 a year is still shown as $1,000 weekly gross the taxable gross is reduced to $980.40

This means the employer's contribution of $19.60 is the amount of salary being sacrificed by the employee per week and is not taxed.

image
image

I have set up an employee on salary sacrifice, and have now paid them a small bonus as an extra emolument. I notice that the employer KiwiSaver contribution has not increased, but the employee contribution has. Why is this?

Salary Sacrifice is a mechanism whereby the employee can make KiwiSaver Contributions at no cost to the employer, by sacrificing some of their salary towards KiwiSaver.

Instead of the employer paying a percentage of gross earnings towards KiwiSaver in addition to the employee's gross earnings, the employee has effectively said "please reduce my salary by a certain percentage, and call it KiwiSaver".

Accordingly no agreement has been made for the employer to pay KiwiSaver in addition to gross earnings, and this is why the employer contribution has not increased.

The employee contribution is based on total gross earnings, and it is because the extra emolument you have paid is included in the employee gross earnings that the employee contribution has increased.

image
image

I have a staff member paid on an hourly rate. Can I use the Salary Sacrifice feature for this employee?

No. The Salary Sacrifice feature can only be used for salaried employees.

More KiwiSaver Information

KiwiSaver Overview
An overview of everything an employer needs to know about KiwiSaver more..
KiwiSaver Employee Setup
KiwiSaver employee setup in Ace Payroll more..
KiwiSaver Pay Calculation
KiwiSaver deductions are fully automated each pay more..
KiwiSaver Automatic Enrolment
Every person that starts a new job is automatically enrolled in the scheme more..
KiwiSaver Exempt Employees
Under 18, over 65, and casual employees are exempted from automatic enrolment more..
KiwiSaver Contribution Rates
All members must contribute 3% of gross wages and may contribute 4% or 8% more..
KiwiSaver Opting Out
An employee has 8 weeks from the start of employment to opt out of the scheme more..
KiwiSaver Opting In
Anyone can opt in to the scheme at any time. Once opted in, an employee can never opt out more..
KiwiSaver Contributions Holiday
All applications for a contributions holiday must be made to the IRD using a KS6 Contributions Holiday request form more..
KiwiSaver Employer Contributions
All employers must contribute 3% for each employee enrolled in KiwiSaver more..
ESCT - What Is It?
A description of Employers Superannuation Contributions Tax and how it is paid more..
ESCT Calculation
ESCT is payable on all KiwiSaver employer contributions more..
ESCT Tax Rates
Employer KiwiSaver contributions are taxed at the top employee marginal tax rate, based on estimated annual earnings more..
ESCT on IRD Monthly Returns
I am doing my monthly return for IRD and the ESCT figure does not show on my IR348 return. What is wrong? more..
KiwiSaver Contributions Report
The KiwiSaver Contributions Report keeps track of contributions, reversals and refunds more..
KiwiSaver Reversals and Refunds
Use the Reversals and Refunds Wizard to reverse and optionally refund KiwiSaver deductions to employees that were automatically enrolled, and then opted out of KiwiSaver more..
KiwiSaver Company Setup
For most employers no company setup is required in Ace Payroll more..
Total Remuneration
Use when an agreed salary package includes KiwiSaver employer contributions more..
KiwiSaver Scheme Providers
The linking of employees to scheme providers does not happen at the payroll end of the process more..
Exempt Schemes
How to disable the deduction of compulsory employer KiwiSaver contributions for employees in exempt KiwiSaver schemes more..
Alphabetical Index
The Ace Payroll alphabetical index provides links to all documentation more..
Ace Payroll FAQ Contents
All the most common Ace Payroll questions grouped by categories in a short table of key words more..
Ace Payroll Frequently Asked Questions
All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more..

KiwiSaver Forms

image KS1 Employee Details
An employer uses this form to notify Inland Revenue about
  • a new employee being enrolled automatically.
  • an existing employee opting in.
image KS2 KiwiSaver Deductions
An employee uses this form to provide details to an employer if they are
  • starting new employment.
  • an existing employee opting in.
  • a member contribution rate change.
image KS3 Employee Information
An introductory guide for an employee about the KiwiSaver scheme.
KS4 KiwiSaver Employer Guide
A 36 page overview of your KiwiSaver responsibilities as an employer.
image
KS6 Contributions Holiday
An employee uses this form to request a contributions holiday.
image
image KS10 New Employee Opt Out
An employee uses this form if they have been automatically enrolled and don't want to be a member of KiwiSaver.