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Employee superannuation contribution tax (ESCT)

Employer superannuation contribution tax (ESCT) is the tax you take off the cash contributions you make to employees' superannuation accounts, including KiwiSaver. 

The rate of ESCT to deduct can vary for each staff member.

Follow these steps to make sure you cover all the must-dos.

1. Work out each employee’s ESCT rate

You only pay ESCT on cash contributions to an employee’s super scheme. For KiwiSaver, this means you pay ESCT on your compulsory 3% employer contribution — and any voluntary extras — but not on the contributions deducted from your employees' wages or salary.

At the beginning of each tax year, you’ll need to work out the ESCT rates for your staff. This will vary as it’s based on each employee’s salary or wage, and how long they’ve worked for you.

If an employee worked for you for the entire previous tax year, base their ESCT rate on the total salary or wage received, plus the total employer cash contribution you made in the previous year.

If they worked for you for only some of the previous tax year, their ESCT rate will be based on their estimated salary and wages for this income year, plus your estimated total employer cash contributions.

The ESCT rates are:

Employee's income for year ended 31 March (including gross employer cash contributions)ESCT from 1 April

$0 to $16,800

10.5%

$16,801 to $57,600

17.5%

$57,601 to $84,000

30%

$84,001+

33%

You’ll need to work out the rate each year as your employee’s salary may change.

You’ll need to work out the rate each year as your employee’s salary may change.

2. Calculate ESCT every pay period

Once you know what rate to use for each person, every payday you'll make the deduction from your gross employer cash contribution to each employee, and add up the total ESCT for all of your staff.

As far as the paperwork goes, each pay period you’ll record ESCT in three places — your wage book or payroll software, your Employer monthly schedule (external link) (IR348) and Employer deductions form (external link) (IR345).

3. Pay ESCT to Inland Revenue

You pay ESCT to Inland Revenue on the same due date as your PAYE and other deductions when you file your Employer monthly schedule (external link) (IR348) and Employer deductions form (external link) (IR345).

Watch Inland Revenue's video to see how a small business calculates and accounts for ESCT.

Video transcript (external link)

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