Employer Contribution to Kiwisaver

GaryMac
2 Posts
User

Employer Contribution to Kiwisaver

We have included the employer contribution in the hourly rate for our staff but on the payslip it shows the take home amount then the Employer Kiwisaver contribution. Is there anyway the employer contribution can be shown as a decution before the final figure of the take home pay.?

Or is the only way to reduce the hourly rate by 3% ?

Thanks

7 REPLIES
MYOB Moderator Steven_M
18,845 Posts
MYOB Moderator
New Zealand

Re: Employer Contribution to Kiwisaver

Hi @GaryMac

 

Welcome to the MYOB Community Forum, I hope you find it a wealth of knowledge


Employer contributions to Kiwisaver are treated as an employer deduction, as it is generally paid by the employer. This does mean that the value of that contribution can't be deducted from the employee's net pay amount. Basically, it is treated as being on top of the employee's wages.


There are some employers that are required to include the employer's contribution as part of the employee pay rate, for example, they get paid $15 including Employer KiwiSaver i.e $14.55 per hour + 0.45 Employer KiwiSaver. Generally, in these cases, you would reduce the employer's hourly rate however it needs to be done with caution and consultation with the IRD, as ESCT (Employer Superannuation Contribution Tax) can complicate matters.


Kind Regards,
Steven
MYOB Client Support
Ultimate Partner jenniek
2,073 Posts
Ultimate Partner
New Zealand

Re: Employer Contribution to Kiwisaver

Hi there @GaryMac, @Steven_M

For an employer to include the kiwisaver employer portion in the overall remunueration, there must be a clause in the contract that states this. The clause can be found on the Dept of Labour website in the std contract templates. If it is not in the contract, it is my understanding that the 3% cannot be part of the overall remuneration, and must be over and above. We have done this for clients by reducing the hourly rate by 3% and although it's not exact, it is the closest we could get. Note the ESCT deduction then comes out of this amount as well, which is a cost to the employee either way.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Condor_Energy
2 Posts
Cover User
New Zealand

Re: Employer Contribution to Kiwisaver

We are just starting to use MYOB Payroll - I can not see where I have gone wrong with the set up.  We want the Kiwisaver contribution to be on top of their pay, but at present it is taking it off as a Post-Tax Deduction - can you please show me where I can change this.

Ultimate Partner jenniek
2,073 Posts
Ultimate Partner
New Zealand

Re: Employer Contribution to Kiwisaver

Hi @Condor_Energy

The employee portion of kiwisaver is taken as a deduction from their earnings. The employer portion is paid as an extra 3% over and above the employee earnings. It's the employer portion that you are paying. An employee must contribute from their earnings to be able to get the employer portion as well.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
MYOB Staff Post RienaP
1,314 Posts
MYOB Staff Post
New Zealand

Re: Employer Contribution to Kiwisaver

Hi @Condor_Energy,

 

In Maintain Pay Codes >> KiwiSaver is set up as a Post-Tax Deductions which is correct. When setting up your employees under Maintain Employees>>Compulsory Deductions>>you will select "Eligible for KiwiSaver" and that will add the to the "Pay Defaults/Totals" to the employees. 

 

21 June -1.png

 

When paying your employees the system will deduct from the employee's pay KiwiSaver on the Gross before the tax is taken off amount. See the screen below:

 

21 June -2.png

 

The whole sum (in this case $882 is multiplied by 0.03 to calculate KiwiSaver and deduct after the tax is deducted. 

 

Hope this helps and let us know if you have further questions. 


Regards,
Riena
MYOB Training Specialist
2010SJA
2 Posts
Cover User
New Zealand

Re: Employer Contribution to Kiwisaver

Hi, just a query on your post, re:  Note the ESCT deduction then comes out of this amount as well, which is a cost to the employee either way. 

 

Can you please confirm that I am reading your comment right?  Is the employee suppose to pay the ESCT deduction? 

Many thanks

Ultimate Partner jenniek
2,073 Posts
Ultimate Partner
New Zealand

Re: Employer Contribution to Kiwisaver

Hi @2010SJA

The ESCT (employer superannuation contribution tax) is deducted from the employer contribution before payment to the kiwisaver fund - so effectively the employee is paying for it because they don't get this money into the kiwisaver - however it comes off the employer contribution and is not deducted from the employee.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Didn't find your answer here?
Try using advanced search to find a post more easily Advanced Search
or
Get the conversation started and make a new post Start a Post