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ESCT Calculation

  • From 1 April 2012 employers must deduct Employer Superannuation Contribution Tax (ESCT) from all KiwiSaver employer contributions.
  • Ace Payroll fully automates the process, with no user input required if using the regular calculation method provided by Section RD65 Income Tax Act 2007
  • A facility is provided for employers to deduct extra tax on the employer contribution if they wish.

See Also
ESCT On IRD Monthly Returns
What Is ESCT?
ESCT Calculation
ESCT Tax Rates

IRD Website - ESCT Guide

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To use the Plus ESCT calculation method from Modify Employee Details select the KiwiSaver tab, then click over the calculation method shown.

From the resulting screen select Plus ESCT.

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Calculation Methods

These notes assume an employer makes the minimum 2% contribution, which is fully taxable from 1st April 2012.

ESCT Regular Calculation

  • ESCT is deducted from the employer contribution.
  • The amount paid in to KiwiSaver, plus the ESCT, comes to 2%.
  • The employee gets less than 2% in their KiwiSaver account, because ESCT is deducted.
  • This is the calculation method provided for by Section RD65 Income Tax Act 2007.
  • The ESCT deduction shows on the employee payslip.
  • If KiwiSaver year to date totals are shown on the employee payslip, then so also do year to date ESCT deductions made using this method.

Plus ESCT Calculation

  • The employer pays ESCT on top of the employer contribution.
  • The employer pays an amount of ESCT so the employee still gets 2% in their KiwiSaver account.
  • The amount of additional ESCT paid by the employer varies based on the marginal tax rate of the employee.
  • Because it is an optional employer expense, the ESCT is not shown on the employee payslip.
  • Even if KiwiSaver year to date totals are shown on the employee payslip, ESCT using this method is never shown as a year to date total on the employee payslip because it is an employer expense.
  • If choosing this method, note the compulsory employer KiwiSaver contribution increases to 3% on 1st April 2013, and is projected to rise to 7% by 2016.

See Also
Payslip Data Options


Income Tax Act 2007

Section RD65
Employers superannuation cash contributions

Contribution in money for benefit of employees

(1) An employer's superannuation cash contribution means an employer's superannuation contribution paid in money either to a superannuation fund or under the KiwiSaver Act 2006 to the Commissioner for later payment to a superannuation fund.

Determining amount of contribution

(2) The amount of an employer's superannuation cash contribution is the sum of

(a) the amount of the contribution received by the superannuation fund or, for a contribution paid to the Commissioner under the KiwiSaver Act 2006, received by the Commissioner for payment to the superannuation fund; and

(b) the amount of tax withheld for the employer's superannuation contribution.

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.
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KS6 Contributions Holiday
An employee uses this form to request a contributions holiday.
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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.