Making Kiwisaver Employer Contributions ESCT Exclusive

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The default set-up in FlexiTime is for Kiwisaver employer contributions to be inclusive of ESCT. So if you are giving a 3% employer contribution, ESCT will be deducted from that 3%.

Some companies choose to make the employer contribution that they give their staff exclusive of ESCT. This way, the employee receives the full 3% of Kiwisaver, and the employer pays the ESCT on top of this.

To do this you need to adjust the default quantity for the Kiwisaver Employer Contribution line in the employee's default pay. The rates used, assuming the employer is contributing the standard 3% will be:

 

ESCT Rate

Employer Contribution Quantity

10.5%

3.352

17.5%

3.636

30%

4.286

33%

4.478

 

Note that ESCT rates for employees may be changed automatically by FlexiTime in the first April pay if the earnings for the employee in the previous year has resulted in them moving into a different ESCT bracket. It is advised to review the rates set up for your employees in the new tax year to ensure the default quantities are still correct.

If your employer contribution differs from 3% then the following formula can be used to calculate the default quantity:

Kiwisaver rate + (Kiwisaver rate * (ESCT rate / (1 - ESCT rate)))

For example, 3% kiwisaver for an employee on 10.5% ESCT: 3 + (3 * (.105 / .895)) = 3.352

 

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