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ESCT - What Is It?

  • ESCT is short for Employer Superannuation Contributions Tax.
  • It is a witholding tax on superannuation payments made on behalf of an employee.

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

IRD Website - ESCT Guide

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ESCT Payment

  • Ace Payroll automatically deducts the relevant ESCT each pay period.
  • When you pay your PAYE, ESCT is included as part of the PAYE on the IR345.
  • Note that ESCT does not appear on the IR348, just the IR345 as per the IRD specification.
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Why should employer contributions not simply be included in gross earnings? Then we could forget about ESCT deductions.

If employer KiwiSaver contributions were included in employee gross earnings, and then taxed as part of employee income, the additional tax paid would be the same or very similar to the ESCT deducted.

Trouble is employer KiwiSaver contributions are not employee income. They are payments made to a third party on behalf of the employee.

If employer contributions were included in gross income some of the many side effects would be

  • ACC Earner Premium would be deducted from the KiwiSaver contribution.
  • Student Loan if applicable would be deducted from the employer KiwiSaver contribution.
  • Child Support deductions if applicable would be influenced by employer KiwiSaver contributions.
  • Holiday Pay would be calculated on employer KiwiSaver contributions.
  • Working For Families entitlements would be reduced if employer KiwiSaver contributions were treated as taxable earnings.

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My employee says the employer should pay the ESCT on top of the employer KiwiSaver contribution. They say it is not fair they are now receiving less in their KiwiSaver account because of the ESCT deduction. What do I say to my employee?

Your employee has a good point. They are receiving less in their KiwiSaver account because of the ESCT deduction.

Trouble is, you as an employer are still contributing the amount required, and complying with your obligations.

A superannuation contribution is defined as the amount actually paid, plus any ESCT deducted.

Unless there is written agreement to the contrary, you as an employer are complying with your obligations.

See Section RD65 Income Tax Act 2007 for the definition of a superannuation contribution.


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We are a non profit and therefore tax exempt. Does this mean we don't need to deduct ESCT from the KiwiSaver Employer Contribution as this is a tax?

Non profit organisations must still deduct ESCT.

ESCT is, in effect, an employee tax. The employers superannuation contribution is the nett contribution that the employee receives plus the applicable tax.

Non profits are not exempt from ESCT - in the same way that their employees are not exempt from PAYE.


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ESCT is going to result in the Government getting a lot of extra money! Will I need to re-do my budgets because of this extra cost?

In most cases, no. The employer contribution remains the same, but the employee will get less into their KiwiSaver account because the tax comes off the employers contribution. There is no new cost imposed on the employer.

The only exception to this is if the employer has contractually agreed to pay the ESCT on top of the Employer Contribution. In this case, a real cost is incurred by the employer.


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.