ESCT is paid by employers on cash contributions to an employee’s superannuation scheme (generally Kiwisaver). ESCT is calculated on the basis of contributions made by the employer.
Payments made on behalf of the employee (as part of their elected kiwisaver contribution) are not subject to ESCT.
| Employee's income (*) | ESCT rate |
|---|---|
$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% |
(*) Income for the financial year ended 31 March including gross employer cash contributions.
ESCT rates presented here were valid as of the time of writing but may be subject to change in the future.
ESCT FAQ
How is the ESCT rate determined for each individual employee?
The Employer Superannuation Contribution Tax (ESCT) rate is determined based on the employee's annual salary plus the gross employer contributions to KiwiSaver or other superannuation schemes.
The ESCT rate increases progressively with the employee's income, so higher earners will have a higher ESCT rate applied to their employer's contributions. This tax rate is calculated by the employer and is specific to each employee, reflecting their individual earnings and tax situation.
How is the ESCT rate applied to employer contributions that exceed the minimum required contribution?
When an employer contributes more than the required minimum to an employee's KiwiSaver, the ESCT is calculated on the entire contribution amount, not just the excess. The rate applied is based on the employee's income bracket, which includes both their salary and the total employer contributions.
Are there any specific rules or exceptions for calculating ESCT for employees who have fluctuating incomes or irregular pay periods?
For employees with variable incomes, the ESCT rate is determined based on their estimated annual income, including projected employer contributions. If there are significant changes in income during the year, the employer may need to adjust the ESCT rate accordingly to ensure it aligns with the employee's correct income bracket.
How do changes in an employee's income during the financial year affect the ESCT rate applied to employer contributions?
If an employee's income changes during the financial year, the employer should recalculate the ESCT rate based on the new income level. This ensures that the correct rate is applied to employer contributions for the remainder of the year. Any adjustments should be reflected in the employee's pay records and reported to the Inland Revenue Department.
ESCT Articles
Why Your Employer's Contributions Don't Match Your 3% Kiwisaver
To many employees it then comes as a shock to see their employer contributions consistently lower than expected on their kiwisaver statement. Why is that? There are two main reasons why the amounts received from your employer in your kiwisaver account don't match the amounts that have come from your salary contributions.