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Employer superannuation contribution tax Video information

Audio and visual transcript

Scene 1

Visual

Title screen with IR logo and Changing for You logo shows on teal background.

Audio

Soft music plays in the background throughout the video.

Scene 2

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Teal background with Jennie appearing with Kiwisaver, ESCT, 3% and other schemes appearing in circles

Audio

Are you an employer? If you make contributions to an employee’s KiwiSaver account, you’ll need to pay employer superannuation contribution tax (ESCT). ESCT is a tax deducted from the employer contributions you pay into the employee’s KiwiSaver account.

Employer contributions are compulsory, and the minimum amount you need to pay is 3% of the employee’s gross salary or wage.

You pay ESCT to Inland Revenue along with your PAYE and other employer deductions.

ESCT is also paid on employer contributions to superannuation schemes other than KiwiSaver. Inland Revenue’s website has more information about these other schemes.

Scene 3

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Zoom out from Jennie, header of Salon Jennies with employees standing next to Jennie, Date 01 April appears in top right

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Jennie owns a busy hairdressing salon in town. All four of her employees belong to KiwiSaver.

At the beginning of the tax year, Jennie works out the ESCT rate for each of her employees.

Scene 4

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Zoom onto Daniel, Customer in salon chair next to Daniel appears, Year calendar appears in Top right

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She starts with senior stylist Daniel.

Last year, Daniel worked at the salon for the full 12 months. That means Jennie can use his last year’s salary to work out his ESCT rate for the coming year.

Scene 5

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Table with all Employees and their salary Bracket and ESCT rate appears

Audio

Here’s the table of ESCT rates.

Scene 6

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Table minimises to bottom left; Daniel appears top left with Salary, KiwiSaver contributions percentage and total appearing on right side of screen.

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Daniel’s salary for last year was $65,000. Jennie’s 3% KiwiSaver employer contribution of $1,950 added to his salary gives a combined figure of $66,950,

Scene 7

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Table with all Employees and their salary brackets and ESCT rate reappear from bottom left

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making Daniel’s ESCT rate 30% of the employer contribution.

Scene 8

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Slide up, Daniel with ESCT rate of 30% and calendar year appear. Gets replaced by www.ird.govt.nz

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Jennie will use this rate for Daniel for the whole of the coming year.

If your employee wasn’t with you for all 12 months of the previous year, you work out the ESCT rate based on what you estimate or expect their salary and your contributions will be for the coming year.

Visit our website and use our tool to work out your employees ESCT rate.

Scene 9

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All five employees slide into view along with their different salaries underneath them. Daniel becomes focus again with his Weekly Salary, Employer contributions, ESCT rate with corresponding figures appear.

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Jennie has both full time and part time employees who earn different salaries. This means they each get their own ESCT rate.

Let’s see how Jennie calculates Daniel’s ESCT every payday.

Daniel’s salary for the week is $1,250. That means Jennie’s employer contribution is $37.50. ESCT is a tax on the employer contribution. For the purpose of calculating ESCT, you use whole dollars only. Jennie removes the cents and applies Daniel’s ESCT rate of 30%.

She must pay ESCT of $11.10.

Scene 10

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Daniel disappears and leaves employer contribution and ESCT with added figure of Net employer contribution. Employer contribution disappears to leave ESCT and net contributions behind.

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Jennie needs to calculate one more figure: the net employer contribution. That’s easy. All she does is deduct the ESCT from the employer contribution including the cents.

Jennie must include both figures in her employment information return.

Scene 11

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Orange box with PAYE calculator and PAYE person symbols appear in front of background. Both symbols are replaced with a bigger calculator symbol with PAYE on it, then replaced with IRD website.

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You don’t have to work out your ESCT manually. Why not do it the easy way? Here are two tools that can help you. Alternatively, a PAYE intermediary could also help you. To check these out, click on the links under the video.

You’ve just seen how most employers calculate their ESCT. There’s another method you can use, which taxes the employer contributions under the PAYE rules. Please visit our website for more information.

Scene 12

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Saloon Jennie appears on left-hand side with the righthand side showing the weekly table with figures for employee, net employer contribution and ESCT along with a total. Table shifts left for a IR348 Employment Information symbol to take right side.

Audio

Meanwhile, back at the salon, Jennie has worked out ESCT for all her employees. Jennie takes the figures for each of her employees weekly pays and includes these in her employment information return. Remember the two figures she needs for her employment information return? The net employer contribution and ESCT.

ESCT is paid to Inland Revenue along with your PAYE by the due date.

Scene 13

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IR384 Return appears with two circles over the total net employer contribution and ESCT in the respective boxes

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She enters the total net employer contribution and ESCT in the respective boxes on the employment information return.

Scene 14

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IR348 Employment Information symbol with green tick appear in the centre of the screen. Shifts up to show calendar symbol with due date in the centre, to be replaced with computer and mouse symbol in the same spot.

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And that’s all there is to it!

Please remember to file and pay your ESCT and other employer deductions by the due date. Inland Revenue’s pay day filing service makes the job a whole lot easier. Check out the link under the video.

Scene 15

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Arrow bullet points appear on screen with contact and information on where to go for ESCT services. Fades to be replaced with IRD and New Zealand government logos and web address for ESCT

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Are you behind with your ESCT? Made a mistake? Phone us on 0800 377 772. Our friendly team can help you get back on track.

If you need more information, go to our website where you will find more information on ESCT and tools to work out your employees ESCT rate and how to calculate how much ESCT is required to be deducted from the employer contribution using the PAYE calculator.

Your tax agent or PAYE intermediary can also advise you about ESCT, and help you choose the calculation method that’s right for your business.

Last updated: 20 Sep 2021
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