ESCT

ESCT (Employer Superannuation Contribution Tax) is a tax that employers pay on their compulsory KiwiSaver contributions before those contributions are deposited into the employee's KiwiSaver account. The ESCT rate depends on the employee's earnings and ranges from 10.5% to 39%, mirroring the income tax brackets.

For example, if your employer contributes 3% of your $70,000 salary ($2,100), and your ESCT rate is 30%, then $630 is deducted as ESCT, and $1,470 lands in your KiwiSaver account. Higher earners effectively receive less benefit from employer contributions due to the higher ESCT rate.

ESCT is calculated based on the employee's earnings plus employer contributions from the previous tax year, or estimated current-year earnings for new employees. Employers can choose between a flat rate or a tiered rate aligned to income tax brackets — the tiered method is usually more favourable for lower-paid employees.