myIR, payments and more
You need to work out your employees' contributions, deduct the correct amount from their pay and pass them on to us.
Employees can choose a contribution rate of either 3%, 4% or 8% of their gross pay.
What gross pay is
Total salary or wages including:
- extra salary gratuity
- overtime, and
- any other remuneration of any kind before tax eg ACC or paid parental leave (PPL) payments.
You'll usually pay employer contributions on the gross pay except for any excluded salary components. These include:
- redundancy payments
- the value of providing:
- board or lodging
- use of a house or part of a house, or
- the payment of an allowance instead of the provision of the benefit.
- expenditure or allowances for accommodation and living costs overseas
- free or discounted shares received under an employee share scheme (also known as a share purchase agreement)
- payments under a Voluntary Bonding scheme funded by the Ministry for Primary Industries, the Ministry of Health or the Ministry of Education.
If an employee doesn't select a rate on their KiwiSaver deduction form (KS2) make deductions at the default rate of 3%.
- make lump sum contributions through us or direct to their scheme provider
- change between the three contribution rates (3%, 4% or 8%) by advising you of their new contribution rate.
They can't change their contribution rate more than once every three months unless you agree.
The definition of gross salary or wages is different for contributions to complying funds. It's worked out on gross bass salary or wages. This excludes:
- commissions, or
- other amounts not included in the employee's gross base salary or wages if these are set out in the fund's trust deed.
As an employer you're required to contribute the equivalent of 3% of your employee's gross salary or wages.
Contributions made to existing superannuation schemes reduce the amount of compulsory employer contributions you're required to pay if certain conditions are met.
All employer contributions are liable for ESCT (employer superannuation contributions tax). The exception to this is if you and your employee have agreed to treat some, or all, of the employer contribution as salary or wages under the PAYE rules.
Working out deductions
To work out deductions use the:
- Weekly and fortnightly PAYE deduction tables (IR340)
- Four-weekly and monthly PAYE deduction tables (IR341), or
- PAYE/KiwiSaver deductions calculator
Make sure deductions start from your employees' first pay.
Passing on deductions to us
You can pass on the employer contributions using the:
- Employer monthly schedule (IR348) if you use ir-File, or
- Employment information (EI) schedule if you're a payday filer.
You can pass on deductions using the Employer deductions form (IR345).
You can stop making deductions for an employee when they:
- take a contributions holiday, or
- give you a Non-deduction notice (KS51).
Contributions made in error
If you make an error in deducting contributions from an employee's pay you can amend this.
If you file using ir-File you can complete an Employer schedule amendments (IR344) form.
If you're a payday file, you can amend your EI and IR345 in myIR.
If necessary we'll refund any contributions made. If these include employer contributions and ESCT, these will be repaid to you.
This process will take longer if we have to request the refund from the member's scheme
Deductions from ACC payments
If you continue to pay an employe after an accident you must keep deducting KiwiSaver. You can choose to make employer contributions but you don't have to. If an employee wants to stop deductions they need to apply for a contributions holiday.
When ACC pays the employee weekly compensation you don't need to make the employee deductions or employer contributions.
Resignation and retirement benefits
Make deductions as normal at 3%, 4% or 8% from the final payment of salary or wages made up for the employee.
Specific exclusions to the term "salary and wages"
These apply where you intend to make ongoing payment to your employee after they retire. One of these relates to periodic payments by way of:
- retiring allowance
- superannuation, or
- other allowance or annuity relating to the person's past employment.
Contact us to learn more about these exclusions.
Find out more
- Employees with special circumstances
- Employees exempt from automatic enrolment
- Compulsory employer contributions