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Tax changes - Budget 2012
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Employers

Find out about the KiwiSaver contributions rate change, what to do if you employ primary and secondary school children, ML and MLSL tax codes, and the student loan repayment rate change.

KiwiSaver contribution rate change

The minimum contribution rate for employers and employees will increase from 2% to 3% of gross salary or wages from the first pay period commencing on or after 1 April 2013.

You will need to change the contribution rate for existing KiwiSaver members if their contribution rate is 2%. If your employee currently contributes at either 4% or 8% there is no need to change their contribution rate.

The default contribution rate for new employees that are automatically enrolled into KiwiSaver has increased from 2% to 3% of gross salary or wages from the first pay period commencing on or after 1 April 2013.

Example - when the KiwiSaver contribution rate takes effect

Rick receives a fortnightly salary of $1,160 and contributes 2% to his KiwiSaver account.

For the pay period beginning 28 March 2013 (through to 10 April 2013) the KiwiSaver contribution rate will still be 2%

Gross earnings
$1,160.00
KiwiSaver employee deduction (2%)
$ 23.20
Gross KiwiSaver employer contribution (2%)
$ 23.20

For the pay period beginning 11 April 2013 (through to 24 April 2013) the new KiwiSaver contribution rate will be 3%

Gross earnings
$1,160.00
KiwiSaver employee deduction (3%)
$ 34.80
Gross KiwiSaver employer contribution (3%)
$ 34.80

All employer contributions paid to a superannuation fund, including KiwiSaver schemes and complying funds, for the benefit of an employee are liable for ESCT (employer's superannuation contribution tax). The exception to this is if the employee and employer have agreed to treat some or all of the employer contribution as salary or wages under the PAYE rules.

Find out more about how to tax employer superannuation cash contributions

Employing primary and secondary school children

From 1 April 2013 if you employ school children, you must deduct:

  • PAYE from payments of salary/wages, or
  • tax from schedular payments

You will need to include their details on the employer monthly schedule (EMS).

To ensure tax is deducted at the correct rate you should ask them to complete theTax code declaration (IR330) form by 1 April 2013.

If your employee is a KiwiSaver member you may also need to start making employee deductions at 3%. If the employee is less than 18 years of age, you don't need to make employer contributions.

ML and ML SL tax codes can no longer be used

If any employees are using either the ML or ML SL tax code, from 1 April 2013 deduct PAYE using M or M SL rates as appropriate, unless they give you a new Tax code declaration (IR330).

Student loan changes

From 1 April 2013, the repayment rate for student loan deductions increases from 10 to 12 cents.

Find out more about student loan changes

 


Date published: 01 Mar 2013

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