Paying ESCT on employer contributions to KiwiSaver

SmoothPay provides two methods of dealing with ESCT (Employer Superannuation Contributions Tax).

  1. The default method causes ESCT to be deducted from the employer contribution (reducing the value to the employee's super fund) -SmoothPay sets the appropriate ESCT percentage at the start of each tax year (you shouldn't alter this unless advised to do so by IRD), or
  2. The employee can elect to pay the ESCT portion by adding the gross value of the employer's contribution to the employee's taxable earnings before calculating how much tax to deduct - this can often result in a lower amount of ESCT, but the biggest advantage to the employee is that the full amount of the employer contribution ends up ion their super fund. This option can be set in the employee's tax settings.

 

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