Tax Facts – KiwiSaver
All New Zealand residents and people entitled to live here permanently are eligible for KiwiSaver. All new eligible employees must be automatically enrolled in KiwiSaver. However there are some employees who are exempt from automatic enrolment. These include:
- Those under 18 years of age
- Casual agricultural workers or Election Day workers
- Private domestic workers
- Casual and temporary employees employed under a contract of service that is 28 days or less
Employees who are automatically enrolled can opt out but must do so within a specified time (from the end of week 2 of their employment to the end of week 8) by filing the prescribed from (KS10).
All eligible existing employees can join the scheme at any time they wish by notifying their employer.
The minimum employee contribution rate is 3% though employees can choose between the rates of 3%, 4%, 6%, 8% or 10%. If an employee does not elect a rate then the default rate of 3% will be used by the employer for contribution deductions made.
Compulsory Employer Contributions
Employers are required to contribute to their employees’ KiwiSaver or complying superannuation fund where employees have opted into these schemes. The minimum compulsory employer contribution is currently 3%.
Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT) on a progressive scale based on the employees’ marginal tax rate.
The government also:
- Pays annual member tax credit (for those 18 and over) of up to $521.43
- Funds a HomeStart grant through Housing NZ if the relevant criteria are met
Prior to 21 May 2015, the government made a $1,000 ‘kick-start’ contribution, however this has ceased..
Note: There is no Crown guarantee of KiwiSaver schemes or investment products of KiwiSaver schemes.
- Give new employees and other existing staff who are interested an Employee information pack (KS3)
- Pass employees’ details to Inland Revenue to enable them to be enrolled
- Deduct contributions from employees’ gross salary and pay these to IRD through the PAYE system
A list of KiwiSaver providers is available at www.kiwisaver.govt.nz
For more information on KiwiSaver and how this may apply to you give us a call or refer to the KiwiSaver for Employers information available on the IRD website.
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