What is ESCT for KiwiSaver and how does it work?

ESCT - or Employer Superannuation Contribution With-holding Tax is the tax that employers must deduct from Employees

contributions and pay to the IRD.

Employer contributions to KiwiSaver were exempt from tax until 1st April 2012. (There were a few exceptions, but these generally applied to super schemes or salary sacrifice arrangements in place prior to the launch of KiwiSaver).

Since 1st April 2012, the contributions have had ESCT due on them.  Employer contributions were 2% of employees income from 1st April 2012 until 31st March 2013.  From 1st April 2013 those contributions increase to 3% of employees income.

It is important to note that the thresholds for calculating ESCT are DIFFERENT to the marginal tax rate thresholds

Employee's salary or wage income for year ended 31 March
(including gross superannuation employer contributions)
ESCT from 1 April
$0 to $16,80010.5%
$16,801 to $57,60017.5%
$57,601 to $84,00030%
$84,001 upwards33%

For more information from IRD on how ESCT works, here is the relevant IRD page.

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