Employer Superannuation Contribution Tax (ESCT) is tax deducted from your employer’s KiwiSaver contributions before they reach your account. While your employer is required to contribute 3% of your gross salary to KiwiSaver, a portion of that is withheld as ESCT — meaning you receive less than the full 3%.
ESCT is deducted from your employer's KiwiSaver contributions at a rate matching your income tax rate (10.5%–33%). On a $70,000 salary, your employer contributes 3% = $2,100, but ESCT at 33% = $693 is deducted first. You receive $1,407 net into your KiwiSaver account. Your employer pays ESCT to IRD on your behalf. The ESCT rate is based on your income from the previous year.
What Is ESCT?
ESCT is a tax applied to employer contributions to KiwiSaver (and other registered superannuation schemes). It is deducted from the employer contribution before it reaches your KiwiSaver account.
ESCT ensures that employer KiwiSaver contributions are taxed — just as salary is taxed through PAYE. Without ESCT, employer contributions would be tax-free income.
ESCT Rates
ESCT is deducted at a rate based on your income from the previous year (salary + employer KiwiSaver contributions):
| Previous year’s income (approx.) | ESCT rate |
|---|---|
| $0–$16,800 | 10.5% |
| $16,801–$57,600 | 17.5% |
| $57,601–$84,000 | 30.0% |
| $84,001+ | 33.0% |
Note: The ESCT thresholds are slightly different from income tax brackets because they include employer contributions in the base.
How ESCT Affects Your KiwiSaver
The employer’s gross contribution is always 3% of your salary. However, ESCT is deducted before it reaches you:
| Salary | Employer 3% contribution | ESCT rate | ESCT amount | Net to your KiwiSaver |
|---|---|---|---|---|
| $45,000 | $1,350 | 17.5% | $236 | $1,114 |
| $60,000 | $1,800 | 17.5% | $315 | $1,485 |
| $70,000 | $2,100 | 30.0% | $630 | $1,470 |
| $90,000 | $2,700 | 33.0% | $891 | $1,809 |
| $120,000 | $3,600 | 33.0% | $1,188 | $2,412 |
Who Pays ESCT?
Your employer pays ESCT to IRD — it comes out of the employer contribution, not from your wages. Your employer:
- Calculates the gross employer contribution (3% of your salary)
- Deducts ESCT at the applicable rate
- Sends the net amount to your KiwiSaver provider
- Sends the ESCT amount to IRD on your behalf
You do not see ESCT on your payslip as a separate deduction — it is already removed before the employer contribution reaches your KiwiSaver.
ESCT vs Employee Contributions
Employee contributions (3%–10% of gross salary deducted from your wages) are different:
- They come from your after-PAYE income — wait, actually they are deducted from your pre-tax gross salary but PAYE is calculated on the remaining amount… actually: employee KiwiSaver contributions are deducted from your gross pay and PAYE is calculated on the gross less KiwiSaver contribution (for some schemes), but the standard approach is KiwiSaver contributions come from gross pay with PAYE applied to gross pay before KiwiSaver deduction.
In practice:
- Employer contributions: Taxed via ESCT (employer pays the tax)
- Employee contributions: Paid from after-PAYE income (tax already paid on your wages before KiwiSaver is deducted)
Frequently Asked Questions
Why do I receive less than 3% of my salary in KiwiSaver employer contributions?
Because ESCT is deducted from the employer contribution. Your employer paid the full 3%, but a portion went to IRD as ESCT. The net amount credited to your account is after this tax.
Does ESCT affect the government Member Tax Credit?
No. The government Member Tax Credit ($521.43/year) is based on your own contributions, not the employer’s. ESCT has no impact on your MTC entitlement.
Can I opt out of ESCT?
No — ESCT is a legal obligation on all employer contributions to KiwiSaver and registered superannuation schemes. It cannot be avoided.
Does ESCT apply to voluntary employer contributions above the 3% minimum?
Yes. Any employer contribution to a registered superannuation scheme, whether mandatory (3%) or voluntary (above 3%), is subject to ESCT.