Employer superannuation contribution tax (ESCT)
Employer superannuation contribution tax (ESCT) is the tax you take off the cash contributions you make to employees' superannuation accounts, including KiwiSaver.
The rate of ESCT to deduct can vary for each staff member.
Follow these steps to make sure you cover all the must-dos.
1. Work out each employee’s ESCT rate
You only pay ESCT on cash contributions to an employee’s super scheme. For KiwiSaver, this means you pay ESCT on your compulsory 3% employer contribution — and any voluntary extras — but not on the contributions deducted from your employees' wages or salary.
At the beginning of each tax year, you’ll need to work out the ESCT rates for your staff. This will vary as it’s based on each employee’s salary or wage, and how long they’ve worked for you.
If an employee worked for you for the entire previous tax year, base their ESCT rate on the total salary or wage received, plus the total employer cash contribution you made in the previous year (before ESCT was withheld).
If they worked for you for only some of the previous tax year, their ESCT rate will be based on their estimated salary and wages for this income year, plus your estimated total employer cash contributions.
The ESCT rates are:
| Employee's income for year ended 31 March (including gross employer cash contributions) | ESCT from 1 April |
|---|---|
|
$0 to $16,800 |
10.5% |
|
$16,801 to $57,600 |
17.5% |
|
$57,601 to $84,000 |
30% |
|
$84,001 to $216,000 |
33% |
|
$216,001 ＋ |
39% |
You’ll need to work out the rate each year as your employee’s salary may change.
2. Calculate ESCT every pay period
Once you know what rate to use for each person, every payday you'll make the deduction from your gross employer cash contribution for each employee, and add up the total ESCT for all of your staff.
As far as the paperwork goes, you need to show each employee’s ESCT in your payday filing. ESCT is submitted on payday returns and no longer requires a separate form. You’ll include the ESCT with your regular payment to Inland Revenue.
Deduct ESCT from employer contribution(external link) — Inland Revenue
PAYE / KiwiSaver deductions calculator(external link) — Inland Revenue
3. Pay ESCT to Inland Revenue
If your business pays $50,000 or more a year in PAYE tax and ESCT, you have to file electronically. You can:
- File in myIR with onscreen entry or with file upload, or
- File using payroll software – you need a myIR account to set this up.
You’ll need to file within two working days of the payday.
myIR secure online services(external link) — Inland Revenue
Filing employment information electronically(external link) — Inland Revenue
If your business pays less than $50,000 a year on PAYE tax and ESCT, you can file electronically, or you can choose to file by paper. Every month, IR will send you Employment Information (IR348) and New employee detail (IR346) forms.
You can file within 10 working days of each pay day or:
| Payday date | Filing date |
|---|---|
| Between the 1st and 15th of the month | Within 10 working days of the 15th of the month |
| Between the 16th and end of the month | Within 10 working days of the end of the month |
Filing employment information by paper(external link) — Inland Revenue
Employer superannuation contribution tax(external link) — Inland Revenue
