Employer superannuation contribution tax (ESCT) is the tax deducted from cash contributions made to employees’ superannuation accounts, including KiwiSaver.
The rate of ESCT to be deducted may vary for each employee.
ESCT is only applicable to cash contributions made to an employee’s super scheme. For KiwiSaver, ESCT is payable on the mandatory 3% employer contribution as well as any additional voluntary contributions, but not on the contributions deducted from an employee’s salary or wages.
At the start of each tax year, you will need to calculate the ESCT rates for your employees. This will differ for each employee and will depend on their salary or wage and their length of employment with you.
If an employee was employed with you for the entire previous tax year, their ESCT rate will be based on their total salary or wage received and the total employer cash contribution made in the previous year (before ESCT was deducted).
However, if an employee was only employed with you for part of the previous tax year, their ESCT rate will be based on their estimated salary and wages for the current income year, as well as your estimated total employer cash contributions.
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Employee’s income for year ended 31 March (including gross employer cash contributions): $0 to $16,800 – ESCT from 1 April is 10.5%
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Employee’s income for year ended 31 March (including gross employer cash contributions): $16,801 to $57,600 – ESCT from 1 April is 17.5%
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Employee’s income for year ended 31 March (including gross employer cash contributions): $57,601 to $84,000 – ESCT from 1 April is 30%
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Employee’s income for year ended 31 March (including gross employer cash contributions): $84,001 to $216,000 – ESCT from 1 April is 33%
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Employee’s income for year ended 31 March (including gross employer cash contributions): $216,001+ – ESCT from 1 April is 39%
It’s necessary to calculate the rate every year as your employee’s salary might undergo changes.
After determining the appropriate rate for each individual, you will deduct the ESCT from your gross employer cash contribution for every employee on every payday, and add up the total ESCT for your entire staff.
Regarding paperwork, you are required to display each employee’s ESCT in your payday filing. ESCT is now submitted in payday returns and does not necessitate a separate form. You will include the ESCT with your usual payment to Inland Revenue.
Deduct ESCT from employer contribution — Inland Revenue
- File through myIR with onscreen entry or by using file upload.
- File using payroll software, but you must have a myIR account to establish this.
It’s mandatory to file within two working days of payday.
Employer superannuation contribution tax(external link) — Inland Revenue
myIR secure online services — Inland Revenue
Filing employment information electronically — Inland Revenue
For businesses that pay less than $50,000 annually in PAYE tax and ESCT, you have the option to file electronically or by paper. Every month, the IR will provide you with Employment Information (IR348) and New employee detail (IR346) forms.
You can file within 10 working days of each payday or:
- Payday date: Between the 1st and 15th of the month – Filing date is within 10 working days of the 15th of the month
- Payday date: Between the 16th and end of the month – Filing date is within 10 working days of the end of the month
Filing employment information by paper — Inland Revenue
If you need help, contact us.
