Answer
ESCT is Employer Superannuation Contribution Tax. It is the tax paid on employer KiwiSaver contributions and is deducted from the contribution before it is paid to the fund.
ESCT rate bands
The rate depends on the employee's total estimated annual income, including expected employer KiwiSaver contributions:
- 10.5% for income up to the first threshold.
- 17.5%, 30%, 33%, or 39% for higher thresholds (the exact bands are set by Inland Revenue and may change each year).
How Lightning Payroll picks the rate
- The estimated annual income is taken from the previous tax year's earnings for existing employees.
- For new employees, the rate is estimated from the agreed annual salary or expected income.
- The chosen ESCT rate is shown on the employee's KiwiSaver tab and can be reviewed each tax year.
Where ESCT appears
- On the pay - ESCT reduces the gross employer contribution before it is paid.
- On the payslip - shown as a separate line under KiwiSaver.
- In payday filing - reported alongside the employer contribution.
If the employer pays KiwiSaver under the alternative SPLIT method (employer treats the contribution as part of the employee's salary for tax), tick that option on the KiwiSaver tab instead of selecting an ESCT rate.
Annual review
Review the ESCT rate at the start of each tax year (1 April) to make sure it still matches the employee's expected income.
