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12 June 2026
N. Cleator
[FYI request #34705 email]
Dear N. Cleator
Thank you for your request made under the Official Information Act 1982 (OIA), received on 14
May 2026. You requested information regarding Inland Revenue’s operational handling of
KiwiSaver non-compliance concerns raised by workers. Your full request is attached to this
response as
Appendix A.
Item one
Concerns about potential KiwiSaver employer non-compliance may initially be raised through
Inland Revenue’s frontline service channels (including myIR, voice, or written correspondence),
where a frontline officer undertakes an initial assessment. Not all such contacts are recorded as
complaints. A matter is recorded as a complaint where a frontline officer is unable to resolve the
issue at first point of contact and escalation is required, or where the customer raises the concern
directly with the Complaints team for example, via an online complaint submission.
Once recorded as a complaint, the customer’s KiwiSaver position is assessed by the responsible
officer by reviewing enrolment status, opt-out documentation (if applicable), and employer filing
records (including payday filing information). Triage is applied on a case-by-case basis, guided
by the complexity of the issue, available evidence, and whether further investigation is required.
Item two
Following an initial assessment of a complaint, the responsible officer determines the appropriate
course of action. Based on the outcome of the assessment, the complaint may be resolved
through provision of information and explanation or escalated to a specialist team where further
review is required. Where no employer non-compliance is identified, the complaint is typically
resolved through guidance. In cases where deductions appear to have been made correctly
through the employer, the employee may be advised to raise any queries about amounts or
payslip discrepancies directly with their employer.
Where potential non-compliance is identified, such as missing or incomplete employer deductions
or contributions, the complaint may be referred to specialist or employer-focused teams for
further investigation. In a smaller number of cases, this includes referral to compliance functions
to contact the employer, assess their obligations, and determine whether corrective action is
required. Where appropriate, this may result in enforcement of compulsory employer
contributions. These activities are undertaken within the broader legislative framework, including
section 15B of the Tax Administration Act 1994 (TAA), which sets out taxpayers’ obligations to
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correctly determine and pay tax, deduct or withhold amounts where required, maintain
appropriate records, and provide information to Inland Revenue.
Decisions to investigate, escalate, or take enforcement action are made on a case-by-case basis,
based on the available information and the outcome of enquiries.
Item three
Inland Revenue’s operational guidance relating to KiwiSaver employer obligations for existing
members is clear that employers must make deductions from employees’ salary or wages,
generally from the first pay, and must continue deductions unless a valid opt out, savings
suspension, or other approved process applies.
Guidance addresses situations where deductions are not made or are made incorrectly, treating
these as employer non-compliance and providing for compliance activity, correction of
employment information reporting, and follow up where errors are repeated or ongoing.
However, while this guidance establishes the obligation to deduct and provides processes to
address non-compliance, it does not provide specific operational direction for situations where
employers delay deductions, fail to act on employee requests, provide incorrect advice regarding
waiting periods, or informally suspend deductions outside established processes. As with other
areas, the guidance is primarily process focused and does not establish a structured framework
for assessing or resolving these types of disputes.
The documents and internal pages listed in
Table 1 below are identified as relevant to your
request, and my decisions on release are outlined. Documents 1 to 6 are attached as
Appendix
B. Some documents and internal pages have been refused under the following sections of the
OIA, as applicable:
• 18(d) – This information is publicly available.
• 18(c)(i) – Making the requested information available would be contrary to the
provisions of section 18(3) of the Tax Administration Act 1994 (TAA). The
Commissioner of Inland Revenue is not required to disclose any item of revenue
information if the release of the information would adversely affect the integrity of the
tax system or prejudice the maintenance of the law.
Table 1
Item
Document
Decision
1.
KiwiSaver employer obligations
Release
2.
Employer obligations
Release
3.
KiwiSaver enrolment overview
Release
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Item
Document
Decision
4.
KiwiSaver deductions and contributions overview
Partially released. Some
information refused under
section 18(c)(i) of the OIA,
section 18(3) of the TAA
5.
Compulsory employer contributions
Release
6.
Extend or cancel a KiwiSaver savings suspension
Release
7.
KiwiSaver employer guide (KS4)
Refused under section
18(d) of the OIA.
Publicly available:
KiwiSaver for employers
8.
Action a KiwiSaver no holding period contributions
Refused under section
work item
18(c)(i) of the OIA, section
18(3) of the TAA
9.
Action an EMP schedules issues lead
Refused under section
18(c)(i) of the OIA, section
18(3) of the TAA
10.
KiwiSaver savings suspension
Refused under section
18(c)(i) of the OIA, section
18(3) of the TAA
11.
KW01 – KiwiSaver – Employer
Refused under section
18(c)(i) of the OIA, section
18(3) of the TAA
Item four
Inland Revenue’s operational guidance relating to historic or retrospective KiwiSaver contribution
issues focuses on the correction and recovery of contributions. Existing guidance includes
processes for; correcting Employment Information reporting, recovering unpaid amounts
(including employee deductions and employer contributions where legally recoverable), and
assessing entitlement to backdated compulsory employer contributions through compliance-
based cases. Guidance also provides for contributions to be treated as relating to the relevant
contribution period and for technical correction of contribution errors.
However, while this guidance addresses contribution correction and recovery, it does not provide
specific operational direction for historic disputes involving worker awareness, misunderstanding
of KiwiSaver enrolment status, or situations where employer conduct may have affected a
worker’s understanding. As with other areas, the guidance is primarily process focused and does
not establish a structured framework for assessing or resolving such disputes. I am therefore
refusing this part of your request under section 18(e) of the OIA, as the documents alleged to
contain the information requested do not exist.
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Item five
Inland Revenue does not hold any policies or guidance concerning the interaction between Inland
Revenue and MBIE / Labour Inspectorate where employment relationship issues overlap with
KiwiSaver contribution concerns.
Accordingly, your request for this information is refused under section 18(e) of the OIA.
Item six
Inland Revenue does not have specific operational guidance on supporting vulnerable workers
(for example, those with communication or comprehension difficulties) in identifying or reporting
KiwiSaver non-compliance.
While internal guidance includes general principles on supporting vulnerable customers and
adapting communication to meet customer needs, this guidance is high level and does not
provide specific direction for KiwiSaver compliance or complaint processes, which remain
primarily process focused.
As such, your request for this information is refused under section 18(e) of the OIA.
Item seven
KiwiSaver related complaints are managed within Inland Revenue’s standard complaint
processes. KiwiSaver-related complaints are not prioritised separately from other complaint
types. However, these types of complaints may be allocated to staff with relevant knowledge or
experience where appropriate.
There are no defined escalation thresholds specific to KiwiSaver complaints. Matters may be
escalated where there is increased complexity, customer impact, or where resolution cannot be
achieved at the initial stage. These complaints are managed in line with Inland Revenue’s
broader complaints processes and service expectations, including timeliness of response and
quality assurance practices such as peer review of correspondence.
Item eight
While the circumstances around late filing or payment are not considered at the point of penalty
application, Inland Revenue does consider contextual information when looking to apply
remission of those penalties.
Section 183A of the TAA details the circumstances under which ‘employer misunderstanding or
administrative error’ would be reasonable grounds for remission to be granted. Negligent failures
and intentional avoidance are unlikely to meet those requirements under the TAA, and so are
unlikely to result in a successful application for remission.
Within audit activities, there are several dimensions by which customer intent distinguishes
outcome. Where instances of non-compliance result in a tax shortfall, whether self-identified or
discovered through audit, the circumstances around the shortfall change the class of penalty
that may be applied, and as a result, the amount of penalty. A penalty for not taking reasonable
care is 20% of the tax shortfall, while a penalty for evasion is 150% of the tax shortfall. All
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shortfall penalties may also be increased by 25% for obstruction or decreased as a result of
voluntary disclosure.
At the higher end of intentional non-compliance, we also consider prosecution and criminal
penalties in addition to corrected tax obligations, which are not considered in instances of clear
misunderstanding or accidental omission.
Right of review
If you disagree with my decision on your OIA request, you have the right to ask the Ombudsman
to investigate and review my decision under section 28(3) of the OIA. You can contact the office
of the Ombudsman by email a
t: [email address].
Publishing of OIA response
We intend to publish our response to your request on Inland Revenue’s website
(ird.govt.nz) as
this information may be of interest to other members of the public. This letter, with your personal
details removed, may be published in its entirety. Publishing responses increases the availability
of information to the public and is consistent with the OIA's purpose of enabling more effective
participation in the making and administration of laws and policies and promoting the
accountability of officials.
Thank you again for your request.
Yours sincerely
Rian Shearman
Group Lead – Customer and Compliance Services - Individuals
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Appendix A – Full OIA Request
I am writing to make a request under the Official Information Act 1982 regarding Inland
Revenue’s operational handling of KiwiSaver non-compliance concerns raised by workers.
I seek information or related guidance regarding situations where employers may delay, ignore,
or fail to action KiwiSaver deduction requests and enrolment obligations for workers. While
general information about employer obligations and backdated compulsory employer
contributions is publicly available, I remain unclear about Inland Revenue’s operational
processes for receiving, recording, assessing, and escalating KiwiSaver-related concerns raised
by workers.
I am requesting any policies, operational guidance, manuals, workflow documents, staff
instructions, escalation criteria, decision-making guidance, or similar material relating to the
following matters:
1. How Inland Revenue assesses and triages KiwiSaver non-compliance complaints
submitted through:
o
MyIR,
o
written communications,
o
online reporting portals,
o
telephone reporting,
o
advisor interactions
o
and complaint escalation pathways.
2. The process used to determine whether a complaint will:
o
receive general guidance only,
o
be referred for further investigation,
o
be escalated to compliance staff,
o
or if and when it may result in enforcement or recovery action.
3. Any internal guidance relating to situations involving existing KiwiSaver members where
employers:
o
delay KiwiSaver deductions for extended periods,
o
or may repeatedly fail to action employee requests,
o
incorrectly advise workers they must complete probationary or waiting periods
before deductions commence,
o
or informally suspend deductions without approved opt-out or saving suspension
processes.
4. Any operational guidance concerning historic or retrospective KiwiSaver contribution
disputes, including situations where:
o
workers were unaware deductions were not occurring,
o
workers believed they remained enrolled,
o
or if potential employer conduct may have prevented workers from understanding
their KiwiSaver status.
5. Any policies or guidance concerning the interaction between Inland Revenue and MBIE /
Labour Inspectorate where employment relationship issues overlap with KiwiSaver
contribution concerns.
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6. Any guidance provided to Inland Revenue staff about responding to vulnerable workers,
including workers who may have communication, literacy, neurodiversity, or
comprehension difficulties affecting their ability to identify or report KiwiSaver non-
compliance concerns.
7. Any information about complaint monitoring, prioritisation systems, workload allocation,
escalation thresholds, or performance measures used when handling KiwiSaver-related
complaints or MyIR communications.
8. Any information which explains whether Inland Revenue distinguishes between:
o
employer misunderstanding or administrative error,
o
or negligent failures,
o
and situations where Inland Revenue suspects intentional avoidance or non-
compliance.
If portions of this request are considered too broad, I would appreciate reasonable assistance to
refine the request rather than refusal where possible.
I am content for personal identifying information to be removed where necessary. I am primarily
seeking policy, operational, and procedural information.
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All employers must comply with KiwiSaver legislation if they are:
New Zealand residents and carry out their business from a fixed establishment
in New Zealand (NZ), or
If they are a non-resident, carry out their business from a fixed establishment
in New Zealand
All employers must determine all new employee's eligibility to join KiwiSaver and if
they are subject to KiwiSaver automatic enrolment criteria, unless they are exempt
employers.
They must:
Give the employee a current version of the KS3 'Your introduction to KiwiSaver
- employee information' within 7 days from the start date of employment
Complete the new employees details on the Employee Details. For more
information refer to Employer filing requirements
Have the employee complete KS2 'KiwiSaver deduction'
form for their records
Make deductions and compulsory employer contributions (CEC) from the
employee's 1st pay, even if they know that their employee intends to opt
out. (But if an employee has in fact opted out after their 1st 2 weeks but before
Day 57, the employer is no longer required to make compulsory employer
contributions for that employee even if they have not received the opt-out
confirmation from Inland Revenue yet.)
Exempt employers are not required to
automatically enrol new employees.
However, they must:
Provide a KS3 'Your introduction to KiwiSaver - employee information' to any
employee who asks for information about KiwiSaver
Make deductions for employees who:
are new employees and existing KiwiSaver members
opt in to KiwiSaver (either new or existing employees)
Make compulsory employer contributions (CEC) to their employees' KiwiSaver
or complying fund schemes if:
the employee is having member contributions deducted from their salary
or wages, and
is between 16 years old (or 18 for periods prior to 1 April 2026), and the
age they are entitled to withdraw their funds from KiwiSaver or a
complying fund scheme.
Complying funds
For the purposes of complying funds (and many other registered superannuation
schemes), amounts not included in the gross base salary or wages (such as
bonuses, allowances and commissions) are often excluded. The types of payments
excluded vary from scheme to scheme and are determined by the trustees (often as
a part of the trust deed). This is defined in the complying fund trust deed, with the
minimum being the gross salary or wages for the purpose of calculating employee
deductions and matching employer contributions.
For further information, refer to Complying funds.
Employer not meeting obligations
The summary in the table below provides the information required to advise
employees who are KiwiSaver or complying fund members and are in the situation
where their employer:
Has not automatically enrolled their employee and/or is not making employee
deductions (and/or employer contributions) or
Making deductions but not passing them through to Inland Revenue.
First the employee should speak to their employer about the situation and if the
employer still disagrees, then re-contact IR to follow the relevant process based on
their situation:
Enrolment Type
Description
New employee and their employer has
The employee should:
not automatically enrolled the employee,
and/or is not making employee
Ensure they provide the required
deductions and/or employer
enrolment information to their
contributions
employer.
Note: The employee may need to give
their employer the required KiwiSaver
enrolment information again. The
employee could take a copy of their
enrolment information as a record of
their instructions to their employer to
make KiwiSaver deductions.
Inform Inland Revenue of the situation,
who will qualify the customer for
backdated CEC. Refer to Backdating
compulsory employer contributions.
The employee may choose to contact a
KiwiSaver scheme provider directly to enrol
and make voluntary contributions. It benefits
the employee to contact the scheme provider
rather than wait until Inland Revenue follows
up with the employer because:
The Government contribution (GVC)
start date is set as soon as Inland
Revenue is notified by the scheme
provider that the member's account is
opened and that a 1st contribution has
been received, so the scheme provider
can make a government contributions
claim at the end of the Government
Contribution (GVC) year
Their eligibility to apply for the
HomeStart Grant or Withdrawal to
purchase 1st home benefits start from
the date their scheme provider receives
their 1st contribution. For more
information on these benefits, refer to
KiwiSaver first home withdrawal
New employee and their employer has
The employee should:
automatically enrolled the employee and
is making employee deductions and/or
Inform Inland Revenue of the situation,
employer contributions, but the
who will qualify the customer for
deductions have not been passed to
backdated CEC. Refer to Backdating
Inland Revenue
compulsory employer contributions
Provide copies of pay slips as evidence
(if required) that employee deductions
have been made and deductions for that
employee do not display on the
Employment Information form (IR348).
This ensures that:
The Government contribution (GVC)
start date set as soon as Inland Revenue
is notified by the scheme provider that
the member's account is opened and
that a 1st contribution has been
received so the scheme provider can
make a government contributions claim
at the end of the Government
Contribution (GVC) year.
Their eligibility to apply for a Savings
suspension, HomeStart Grant or
Withdrawal to purchase 1st home
benefit start from the date their scheme
provider receives their 1st contribution.
The employee should contact their scheme
provider who:
Complying fund member
Monitors employer non-compliance for
complying funds
Contacts the Financial Markets
Authority if non-compliance persists.
Failure to deduct
Employers will be subject to late payment penalties as set out in the Tax
Administration Act 1994. This penalty is applied when an employer fails to:
Make KiwiSaver deductions from an employee’s pay who is a member of
KiwiSaver or subject to automatic enrolment
Make KiwiSaver deductions at the correct rate
Short paid compulsory employer contributions
From 1 April 2021, compulsory and voluntary contributions will now be liable for
UOMI. Voluntary employer contributions will now be liable for late payment
penalties and non-payment penalties. Periods prior to 1 April 2021 will not be
affected.
Failure to provide
An employer is required to:
Give a KS3 ‘Your introduction to KiwiSaver - employee information’ pack (and
a Product Disclosure Statement for an employer chosen scheme - if the
employer has one) within 7 days of the employee commencing new
employment.
Provide details of new employees who have been automatically enrolled, or
employees who opt in via the employer.
Forward to Inland Revenue all KS10
'New employee opt-out request' forms
given to them.
This information is required to be sent to us no later than their next employment
information return.
If the employer fails to do this the employer will be subject to the late payment
penalties as set out in the Tax Administration Act 1994.
Note: The employer will not be penalised for failure to provide an information
pack, if the employer contacted IR as soon as they realised they did not have
sufficient packs and IR failed on this request. The employer will not be penalised if
an employee fails to supply or supplies incorrect information to them.
Policing
All employers are responsible for making various deductions and ensuring that the
related payments and documentation is sent to Inland Revenue on time. It is a
serious matter if an employer does not properly deduct, make payments or notify
Inland Revenue of deductions via returns. Employers face penalties if they do not
meet their responsibilities.
KiwiSaver penalties are not disputable but can be considered for remissions under
sections 183A and 183D of the Tax Administration Act 1994.
For further information on the EMP policing, refer to Return policing - filing
expectations.
Penalties
Deductions not forwarded to Inland Revenue
If KiwiSaver deductions are made but not forwarded to Inland Revenue the PAYE
penalty regime of the Tax Administration Act 1994 will apply (late payment
penalties, UOMI and possibly shortfall penalties).
Late payment penalty
Before 1 April 2009 - Late payment penalties and incremental penalties were
applied to the KSE tax type only.
From 1 April 2009 -
Late payment penalties and incremental penalties are applied
to the KSE tax type and compulsory employer contributions (CEC) only. No late
payment penalties were charged on voluntary employer contributions (VEC).
From 1 April 2021 -
Late payment penalties and interest apply to VEC and interest
applies to CEC. This applies to VEC and CEC in periods from 1 April 2021.
For information on how the penalties are applied, refer to Penalties and interest.
Non-payment penalty
A non-payment penalty is a shortfall penalty that applies to employers who have
filed their IR348 showing an amount of tax payable (the returned amount) but have
not paid it in full.
The penalty will be either 10% or 5% depending on what action the employer
takes, and the maximum non-payment penalty applied in relation to any one
schedule is 150% of the amount owing the day before the 1st non-payment
penalty is chargeable. For further information on the non-payment penalty, refer to
Non-payment penalty on employment deductions.
Normal late payment penalties and interest will still apply.
From 1 April 2009 non-payment penalties apply to CEC only. Interest is not charged
on KSR.
Before 1 April 2009 non-payment penalties applied to the KSE tax type.
Use of money interest
From 1 April 2009 credit interest applied to KSR tax type but not debit interest. For
more information on interest refer to Use of money interest (UOMI).
Before 1 April 2009 debit and credit interest applied to KSE tax type only.
Government contributions
Employer non-compliance which results in a KiwiSaver or complying fund member
not receiving their employee deductions in their account at the end of the
Government Contribution (GVC) year may impact on when the member receives
their government contributions (GVC) entitlement and how much GVC they receive.
Related reading
KiwiSaver Act 2006
Section 23 Employers must give information to Commissioner
Section 40 Commissioner must supply information pack
Section 42 Employer must supply information pack to certain employees
Section 43 Employer must also supply investment statement for employer's
chosen KiwiSaver scheme (if any)
Section 66 Obligation to make deductions: general rule
Section 69 Unremitted deductions made by employers
Section 98 Short payments by employers if not enough money remitted to
Commissioner to cover all of employees' deductions and employer
contributions (Repealed)
Section 215 Penalty for employer to fail to provide information
Tax Administration Act 1994
Part 9 Penalties
Employment Relations Act 2000
Section 4 Parties to employment relationship to deal with each other in good
faith
IR website
KiwiSaver for employers
Opt an employee into KiwiSaver
About Te Mātāwai About KiwiSaver Contact us Support Portal
Knowledge is gold. Share yours and help us grow Te Mātāwai.
Overview
Employers are required to register with Inland Revenue and to make deductions
from payments made to people who work for them. The employer must always
keep full and accurate wage records and file pay information to Inland Revenue. For
information regarding employer filing obligations refer to Employer filing
requirements
The employer must pay PAYE to Inland Revenue by the due date, for information on
payment due dates for employers refer to EMP payment due dates.
Ways to register as an employer
The preferred methods for EMP registration are through myIR or via the Companies
Office at the time of incorporation, see Employers - registration for more
information.
Tax codes
All employees must fill in either an IR330 Tax code declaration (for employees) or
an IR330C Tax rate notification for contractors (for contractors receiving a schedular
payment). This is retained by the employer. The employer may retain an electronic
record of the paper form or the original IR330.
If an IR330 or IR330C is not completed, tax must be deducted at the no-notification
rate of 45 cents per dollar (plus ACC earners levy for employees) or 20 cents per
dollar for non-resident companies receiving schedular payments.
Employers may be contacted by Inland Revenue asking them to change their
employees tax codes. They will be advised which employees are using the incorrect
tax codes and let them know which code the employee should be on. This change
will need to be made in the next pay period.
This may also happen for contractors using an incorrect rate for schedular
payments, they will be advised of the correct rate to use. This change will need to
be made in the next pay period. More details are included in the letter that we
issue.
Child support deductions
Inland Revenue assess and collect child support from liable parents and may
require employers to deduct child support from any employee's wages, they are
legally required to do so on request. For more information, refer to Child support
employer deductions
Student loan repayments
Employee with M SL tax code
Any employee with the tax code M SL you must deduct student loan repayments
along with the normal PAYE and pay them to Inland Revenue. The IR340 and IR341
PAYE deduction tables show the amount of PAYE and student loan repayments to
be made. The PAYE/Kiwisaver deductions calculator on our website also show the
deductions to be made.
Deductions are made at the rate of 12 cents for every dollar earned over the pay
period threshold. For pay threshold information, refer to Tax codes.
Example
Keegan has a tax code of M SL, his weekly gross pay is $500.00. Taking into
account the $380 weekly repayment threshold, Keegan has $120 subject to
student loan repayment deductions. Keegan will have a $14.40 student loan
repayment deducted from his wages.
Employee with secondary tax code
For an employee with an SB SL, S SL, SH SL, ST SL or SA SL from 1 April 2021) tax
code, student loan repayments are to be made at 12 cents in the dollar from the
first dollar earned.
No student loan deductions from some income types
You do not deduct student loan repayments for any of the following:
Casual agricultural employees (CAE)
Election day workers
People on schedular payments
People on the no-notification rate
Paying the student loan deductions to Inland Revenue
The employer must show the employee's student loan repayment deductions on
their Employment Information (EI) return.
Additional deduction requests
If an employer is asked to deduct arrears (e.g. section 157, section 154) from an
employee's wages, legally they must make these deductions. This is set out in
various legislation.
Refer to Deduction notices - Bank, employer or other third party
KiwiSaver
Kiwisaver deductions
If an employer has an employee who is eligible to be automatically enrolled in
KiwiSaver, or is currently a member of KiwiSaver they must make deductions from
the employee's wages at the specified rate. If a rate is not specified the default
3.5% should be applied.
Refer to KiwiSaver employer obligations
KiwiSaver compulsory employer contributions
Employers are required to make compulsory employer contributions (CEC) to their
employees KiwiSaver schemes or complying funds if:
The employee is having member contributions deducted from their salary or
wages, and
Is between 16 years old (or 18 for periods prior to 1 April 2026), and the age of
eligibility for withdrawing from KiwiSaver or the complying fund.
Refer to Compulsory employer contributions
Employee share scheme (ESS) benefits
If an employer provides an employee with benefits under an employee share
scheme they will be required to show the value of the ESS benefits on their
Employment Information (EI) return. Refer to Employee share schemes (ESS)
Payroll giving
The payroll giving scheme is voluntary for both employers and employees. If
employers choose to implement the scheme in their workplace their employees do
not have to take part if they do not wish to.
If their employees do choose to make donations via payroll giving employer's are
required to pass any donations to the donee within 2 months of the PAYE period in
which the donation was deducted. They also need to calculate the tax credit for
payroll donations each employee is entitled to for that pay period and include this
on their Employment Information (EI) return. Refer to Payroll giving
Horticultural or viticultural industries
Contractors including companies who are operating in the horticultural and
viticultural industries will be required to have tax deducted for work on or in
connection with land used or intended to be used for horticulture, or viticulture,
being other work or services in the nature of any of the following:
Picking and packing of fruit or grapes
Pruning or thinning of fruit trees or grapes
An IR330C must be completed and tax deducted using the rate on that form.
Refer to Tax deductions for horticulture, viticulture and agriculture contractors
Labour hire arrangements
Contractors (including companies) that receive payments under labour hire
arrangements must have tax deducted under the schedular payments rules.
An IR330C must be completed and tax deducted using the rate on that form. This is
retained by the employer.
Overseas employers
Overseas employers with employees working in New Zealand will need to register
as an employer with Inland Revenue if:
1. They have a ‘sufficient presence’ in New Zealand; or
2. They provide their employees with non-cash benefits or make contributions to
their superannuation scheme or fund, (unless they agree with the employee
that the employee is responsible – this must be documented)
For help in determining if a Non-resident employee has sufficient presence refer to
OS 21/04 - Non-resident employers’ obligations to deduct PAYE, FBT and ESCT in
cross-border employment situations.
Treatment of contributions to a foreign superannuation
scheme
FBT is the default treatment however, an employer may choose to apply employer
superannuation contribution tax (ESCT) to cash contributions to a foreign
superannuation scheme. This includes contributions to sickness, accident, or death
benefit funds within that scheme (so that apportionment of the contribution is not
required).
An employee may also agree with the employer to treat the cash contribution as
salary or wages to be taxed under the PAYE rules.
Safe harbour for incorrect determination
When a non-resident employer is not paying payroll taxes on payments made to
New Zealand based employees, they may need to correct their position. Such a
situation may arise where the non-resident employer had not properly understood
their obligations or had incorrectly determined they had no obligations to pay
these taxes.
To correct matters the employer should consider making a voluntary disclosure and
pay the outstanding tax along with any penalties and interest that may be
required.
From 1 April 2023 a safe harbour is available for those non-resident employers who
had not being deducting and paying the taxes as they should have been.
The safe harbour will apply where the non-resident employer has:
either two or fewer employees present in New Zealand at any point in the
income year, or pays $500,000 or less of gross employment-related taxes in
New Zealand for the income year, and
within 60 days of the failure, taken reasonable measures to manage their
employment related tax obligations.
Where the safe harbour requirements are met, the non-resident employer would
be protected from penalties and interest on the unpaid tax.
Refer to Voluntary Disclosures.
60-day grace period
From 1 April 2024, employers who are required to deduct tax and have not done
so, will have 60 days to file the required return and make a payment if certain
criteria are met.
The grace period applies as long as the employer has taken reasonable measures
to manage their employment-related tax obligations, and the employee is present
in New Zealand for a period during which the employee has:
Breached a threshold for exemption under section CW 19 of the Income Tax
Act 2007; or
Breached a threshold for exemption under a relevant double taxation
agreement; or
Received an unexpected PAYE income payment.
The 60-day grace period runs from the earlier of the date of breach or payment (as
applicable) or the date on which the employer could reasonably foresee that a
breach or payment would occur. Refer to Explain non-resident employer contractor
filing tax obligation.
The 60-day grace period also applies to non-resident contractors. Refer to Explain
non-resident contractors tax obligations.
Overseas Employees
If a resident employer either employ's non-residents in a foreign country or sends
current employees to a foreign country to work there may be a change in
obligations.
Employing a current non-resident of NZ in a foreign country. There is no taxing
right on the employees income as it is non-resident foreign sourced income.
The employer will need to consider their obligations in the foreign country.
There may be a requirement to deduct PAYE should the employee come to NZ
to work for any period of time. This will depend upon the applicable DTA.
Sending a current NZ tax resident to work in a foreign country will have
consequences for PAYE dependant upon the applicable DTA. Generally if the
employee remains a NZ tax resident there will be relief from foreign tax
provided there are no local rules which require tax to be deducted. If there is
such a requirement the employee can apply for a tailored tax code or the
employer can apply for an annual PAYE arrangement (see following section). If
the employee is permanently transferring to a foreign country and will become
a non-resident, the employer should cease deducting PAYE and ascertain their
obligations in the foreign country. If the employer incorrectly deducts PAYE the
employee can seek a refund by filing an IR3N or by the employer amending
their EI's. see operational memo Interim Position on PAYE refunds for non-
resident employees.
PAYE special arrangements
From 1 April 2024, anyone who employs cross-border workers can apply to us for
an annual PAYE arrangement. This special arrangement means PAYE can be paid by
May 31 following the end of the tax year, instead of after each payday. Requests
can be made under RA 15(4B) of the ITA and section 23Q of the TAA.
An annual PAYE agreement is only approved when ‘special circumstances’ exist, and
employers establish the scenarios that qualify for annual payments of tax.
Examples of special circumstances could include:
short-term international business travellers
trailing compensation, for example FBT benefits, bonus/share payments made
to employees who have left New Zealand already
tax equalised individuals.
Non-resident employers are required to set up a shadow payroll before they can
file employment information and make payment.
Requests can be made through myIR, or by contacting Inland Revenue. Please
make sure the customer includes:
name and IRD number of the employee
a description of the class of employees the arrangement relates to
the special circumstances relating to the arrangement
Short-term
An employee whose activities in the
host country will typically be
International
of a limited duration within a 12-month period.
business travellers
A short-term business trip may be exempt under either the 92-
day rule in CW 19, or the 183-day rule as contained in applicable
double tax agreements. However, If the duration exceeds the
applicable exemption, New Zealand income tax will be due. The
Commissioner may agree with the employer that this is a special
circumstance and allow the employer until 31 May to report and
pay this additional payment.
Tax equalisation
As tax rates differ between countries,
tax equalisation is an
approach that ensures a worker is neither advantaged nor
disadvantaged by accepting an
assignment to a particular
country. The employee and
home country employer agree net
pay on a “neither better nor worse off” or “stay at home” basis.
The
home country employer deducts a hypothetical
home country
tax from the employee’s remuneration, excluding any
components that are paid purely because of the
assignment. The
home country and
host country employers are responsible for the
payment of tax due to the respective revenue authorities, as per
the terms of the
assignment.
Trailing payments
A payment received by an employee for services provided in
New Zealand that are made after the employee has ceased to
live/work in New Zealand, but relating to the
assignment period;
for example, a bonus/share payment, or FBT benefits. The
Commissioner may agree with the employer that this is a special
circumstance and allow the employer until 31 May to report and
pay this additional payment.
Fringe benefit tax (FBT)
If employers provide Fringe benefits to their employees, shareholders or other
people associated with their business, they must generally pay fringe benefit tax
(FBT) on the value of the benefits. Refer to Fringe benefit tax
Payroll information that must be supplied to
employees
An employer will need to give payroll information to their employees only if any of
these apply:
There is no IRD number for that employee on the employer's Employment
Information (EI) return
The employee needs their details early because they're leaving the country
Deceased employees (but don't mention this unless relevant).
In other situations the employee can request a summary of income (previously
called summary of earnings) from Inland Revenue.
If the employee believes their summary of income is not accurate they can
approach the employer for the relevant payroll information.
If the employer does need to give payroll information to their employee, the
required information is:
Gross income
PAYE deducted
Period employed
Any child support amounts deducted
Any student loan amounts deducted
Any KiwiSaver employee deductions
Any KiwiSaver employer contributions
Any donations made via payroll giving
Any tax credits for payroll donations
If the employee receives a payslip each payday and these payslips show the year to
date totals, the year's last payslip will show the totals for the year.
Name and contact details
IRD number
Whether they are a KiwiSaver member
Deduction rate (the default rate is 3.5%)
Signed as correct by the employee
This includes customers who requested to be enrolled into KiwiSaver via
their employer.
Existing KiwiSaver members
Employees who are KiwiSaver members must contribute to KiwiSaver through their
employer and have deductions taken from their salary or wages (subject to
eligibility). They cannot bypass their employer by contributing directly to a
KiwiSaver scheme provider although, they can apply for a KiwiSaver savings
suspension after being a member for 12 months. When starting new employment,
members must provide the required enrolment information to their employer upon
commencing work. This advises their employer that they are a KiwiSaver member,
what rate to make their deductions (either 3.5%, 4%,6% 8% or 10%, or 3% if they
are on a temporary rate reduction), or whether they are on a savings suspension.
Re-enrol in KiwiSaver
This is for when an employee has either; opted out and has changed their mind or
had their account closed previously.
Once the member has opted out or their KiwiSaver account has been closed,
members will need to re-enrol either through their employer or directly through a
KiwiSaver scheme provider of their choice. If the member has completed an opt out
Inland Revenue cannot stop the opt out process. The member will need to either:
Enrol through their chosen KiwiSaver provider
Wait until they have received an opt out confirmation letter and refund of their
deductions before they re-enrol through their employer.
Automatic enrolment
Automatic enrolment does not apply where the person does not meet the Eligibility
to join KiwiSaver.
All eligible new employees who meet the KiwiSaver automatic enrolment criteria
and are not already KiwiSaver members will be automatically enrolled in KiwiSaver
unless their employer is an exempt employer. Refer to Employer exemption from
KiwiSaver auto-enrolment
When an employer files the Employment Information (EI) and indicates they have a
new employee they are required to complete the new employee section which
along with a KiwiSaver deduction creates an automatic enrolment. An IR346/IR346K
'New employee details' form can still be created however is not necessary.
To meet their KiwiSaver employer obligations employers must:
Determine whether a new employee is eligible to be a KiwiSaver member and
is subject to automatic enrolment
Complete a IR346/IR346K and submit it to Inland Revenue
Deduct KiwiSaver from their employees first pay
Make Compulsory employer contributions (CEC) where applicable
It is a requirement of KiwiSaver legislation that the employer must enrol their
employee, make deductions and contributions from the employees first pay even if
they know that their employee intends to opt out.
Some employers may not realise that they still have to make deductions and
contributions when an employee intends to opt out.
To find out who can be excluded from the automatic enrolment process, refer to
KiwiSaver automatic enrolment.
Non-salary or wage earners
If someone is not a salary or wage earner (for example self-employed or
beneficiary) and wants to become a KiwiSaver member, they need to enrol directly
through their chosen KiwiSaver scheme provider by completing an enrolment
application, once this has been completed there is no ability for a member to opt
out.
If the member becomes a salary or wage earner, they will be required to have
deductions and CEC, unless they apply for a savings suspension.
Non-salary or wage earners who are entitled will receive the Government
contributions (GVC) however will not have CEC until they receive a salary or wage
subject to PAYE and contribute to KiwiSaver from that salary or wage.
Enrol directly through a KiwiSaver scheme provider
A new member can join KiwiSaver by contacting a scheme provider directly, rather
than by joining through an employer. The member will need to complete an
enrolment form with their chosen provider. Once Inland Revenue receives this
information from the scheme provider, we do not need another copy from the
employer.
When an employee advises that they have enrolled directly with a scheme provider,
the employer must still complete the IR346 form.
The KiwiSaver scheme provider will provide the member a copy of the Product
Disclosure Statement for their scheme. Once a member has chosen to enrol
through a KiwiSaver scheme provider, they are unable to opt out.
The active choice enrolment date is the date of the B2B message from the
KiwiSaver provider or account open date, which ever was earlier.
Children joining KiwiSaver
A child must meet the eligibility to join KiwiSaver as well as the following:
A child under 16 requires 1 of their legal guardians to enrol them directly with
their chosen scheme provider
A child aged 16 or 17 requires 1 legal guardian to co-sign the enrolment. If the
child does not have a legal guardian, they may enrol themselves directly with a
scheme provider
Children must enrol into KiwiSaver directly through a scheme provider, it is at the
scheme providers discretion to accept or refuse the application. If accepted all
correspondence between the child and the scheme provider must be treated as if
the child was 18 years old.
Once an employee under 18 is accepted by the scheme provider, we will write to
the employer and ask them to start deducting their contributions. We will provide
the employer with the contribution rate for that employee and their name and IRD
number.
Conditions for members under 16 years
No entitlement to government contributions until the child turns 16 (18 prior
to 1 July 2025)
No entitlement to employer contributions until the child turns 16
The member must have KiwiSaver deductions from their salary or wage
For more information around children opting out of KiwiSaver refer to KiwiSaver
opt out.
Related reading
KiwiSaver Act 2006
Section 9 Outline of how people become members of overall KiwiSaver
scheme
Section 10 Who automatic enrolment rules apply to
Section 22 Employees giving information to employers
Section 23 Employers must give information to Commissioner
Section 35 Opting in by persons under 18
Section 36 Effect of opting in by employees
IR website
KS4 KiwiSaver employer guide
IR333 New employer information
IR335 Employers guide
IR320 Smart business guide
About Te Mātāwai About KiwiSaver Contact us Support Portal
When KiwiSaver members go on leave
When KiwiSaver members change employers or start a new job
Contributions to KiwiSaver when a member moves overseas
Member on a savings suspension
Contributions to KiwiSaver when a member is a shareholder employee
Contributions refunded to employee and included on IR348
Related reading
s 18(c)(i)
Employee with salary or wages
New or existing employees who are KiwiSaver members must contribute to
KiwiSaver through their employer and have deductions made from their gross
salary or wages, regardless of any other retirement scheme they may also be
contributing to, unless they:
Are on a valid KiwiSaver savings suspension
Have reached the age of eligibility to withdraw and have completed a KS51
Non-deduction notice.
There is no minimum or maximum income thresholds for deductions (such as
contributions apply to all gross salary or wages). They can also make KiwiSaver
voluntary contributions directly to their scheme provider. Employees use their usual
tax code and employers continue to deduct PAYE based on this code.
Tailored tax codes - If an employee is using a tailored tax code, any KiwiSaver
contributions are in addition to the rate given on the tailored tax code certificate.
Example
If an employee has a tailored tax deduction rate of 30% and makes
KiwiSaver contributions of 4%, the total deductions from their salary or
wages will be 34%.
Each member's KiwiSaver contributions are paid to Inland Revenue and held for an
initial holding period of 2 months. The 2 month holding period takes effect from
the date of the member’s first contribution. Refer to When KiwiSaver scheme
provider receives member contributions for details.
Interest is paid on the contributions while they are with Inland Revenue - refer to
KiwiSaver interest.
State and integrated schools
Refer any education sector employees or employers to the Novopay website for
information about KiwiSaver.
Casual employee engaged on irregular and intermittent
basis receiving holiday pay with wages
If a casual employee is not an exisiting KiwiSaver member, they are not subject to
automatic enrolment. KiwiSaver deductions are not required unless the employee
opts in by providing their employer with a KS2. Each time the employee accepts an
offer of work it is treated as a new period of employment, so is considered
temporary. An EMP deduction exemption (Type: Casual Employee) can be added to
record that the employee is casual so not eligible for KiwiSaver automatic
enrolment.
If a casual employee is an exisiting KiwiSaver member, then KiwiSaver deductions
and contributions are required unless the employee has a current KiwiSaver savings
suspension
Tax on scheme contributions
KiwiSaver or complying fund member contributions are calculated on gross salary
or wages and deducted from the
net salary or wage.
Tax is deducted at the same time the deduction is made, so any withdrawals from a
KiwiSaver or complying fund scheme will not be taxed again (such as, withdrawals
are tax-free).
Salary sacrifice arrangements
An employer and employee may mutually agree that the employee's salary will be
reduced by the amount of the employer's contribution to their KiwiSaver or
complying fund scheme. For more information refer to KiwiSaver salary sacrifice.
Deceased employee
A person is deemed to no longer be a member of KiwiSaver from the date of death.
There should be no more contributions or deductions made from salary or wages
after this date.
Non-employee contributions
The member makes KiwiSaver contributions directly to their scheme provider or
through Inland Revenue. The contribution rate, payment method and frequency are
agreed between the member and scheme provider.
Examples of a non-employee
IR56 taxpayer, self-employed, persons who receive schedular payments
(WT) or beneficiary.
Employer contribution
Employers generally must make compulsory employer contributions (CEC), these
must start from the next calculation of salary or wages for the employee, with the
KiwiSaver deductions. For more information on when an employer must contribute
or not, refer to Compulsory employer contributions.
Employee belongs to multiple schemes
If an employee is a member of both KiwiSaver and a complying fund, the employer
is required to make only 1 set of compulsory employer contributions (CEC). The
employer and employee should agree between them which fund the CEC are to be
paid to. If they are unable to agree, then the contributions must go to the
employee's KiwiSaver scheme.
If the employer's contribution to a complying fund is at a rate less than the CEC
rate, they will need to pay any difference as a CEC to the employees KiwiSaver
scheme. For more information, refer to Contributions to superannuation schemes.
If an employee is a member of both KiwiSaver and another superannuation
scheme, the employer is required to make KiwiSaver employee deductions, unless
the employee has a current savings suspension.
KiwiSaver contributions when income source
changes
Multiple jobs
When an employee has multiple jobs:
Prior to joining KiwiSaver - Deductions are only required from the job they
started at the date of joining KiwiSaver (if automatically enrolled) or the job
they nominated (if they opted-in). They don’t have to have deductions from
any of their other jobs.
After joining KiwiSaver - Deductions are required from any new employment
started since joining KiwiSaver. They can apply for a KiwiSaver savings
suspension to stop deductions from each/all jobs, as required.
Active choice enrolment - Deductions are required from all jobs. We are
required to send notification to each of their employers to start deductions at
the time of their enrolment. They can apply for a KiwiSaver savings
suspension to stop deductions from each/all jobs, as required.
If deductions are being made from an employee’s pay, generally the employer will
need to make [compulsory employer contributions] as well.
Two jobs with 1 employer
KiwiSaver deductions are taken from the total gross salary or wages paid by that
employer regardless if this is for more than 1 position with the same employer.
Members over 65 years
Employees can stop deductions from their salary at any time after reaching their
eligible withdrawal date by giving their employer a KS51
Non-deduction notice.
If they wish to continue or restart deductions, they can by:
Making voluntary payments to their provider or Inland Revenue, or
Giving their employer a KS2 - Employers must continue to make deductions
from their employees salary, if the employee choses to continue to contribute
to KiwiSaver.
When KiwiSaver member receives income under the
Veterans’ Support Act 2014
The following applies to customers who are receiving Weekly Income
Compensation or Weekly Compensation under the Veterans’ Support Act 2014.
These customers:
Need to contact a scheme provider directly to opt in if not already a KiwiSaver
member
Can choose to pay directly to the scheme provider by negotiating the terms
and conditions of their enrolment, for example contribution rate, payment
method and frequency, or
Can request deductions be made from their payments by contacting Veterans’
Affairs New Zealand (VANZ) but they will NOT be entitled to compulsory
employer contributions (CEC)
Must have KiwiSaver employee deductions made by their employer if they are
working as well as receiving Weekly Income Compensation or Weekly
Compensation
Can't opt out of KiwiSaver, but will be able to apply for a KiwiSaver savings
suspension
May be entitled to receive a government contributions (GVC) on the
contributions (employee deductions and/or voluntary) they have made in the
GVC year.
When KiwiSaver members receive ACC payments
The following applies for KiwiSaver members who receive ACC payments:
Applies to
Description
The employer continues to:
pay their employee after an
accident
make any KiwiSaver employee
deductions that were in place
An employer takes part in the Accident
before their employee's accident
Compensation Corporation's (ACC)
partnership programme or has an ACC
The employer can choose to make
employer reimbursement agreement
compulsory employer contributions
but are not obliged to
The employee must apply to IR for a
savings suspension to stop KiwiSaver
contributions being made from their
salary or wages
The employer does not make:
employee deductions from those
ACC pays weekly compensation to the
payments
employee
compulsory employer contributions
(CEC)
When KiwiSaver members go on leave
The following applies for KiwiSaver members who go on leave:
Applies to
Description
On sick leave, annual leave (whether
staying in New Zealand or going overseas),
Continue from salary or wages unless they
or paid parental leave (PPL) and still being
go on a KiwiSaver savings suspension
paid by their employer
Customers can choose to have KiwiSaver
On paid parental leave (PPL) and not
deducted from their PPL payments refer to
receiving any payments from their
Paid parental leave (PPL) deductions from
employer
entitlement
Stop automatically
Note: Members can remain contributing by
Unpaid leave
contacting their provider.
When KiwiSaver members change employers or
start a new job
The following applies for KiwiSaver members who change employer or start a new
job:
Applies to
Description
The member will need to provide the
required enrolment information to their
new employer so that:
Employee deductions will continue at
Still earns a salary or wage
the requested contribution rate and
Their employer knows they are required
to make compulsory employer
contributions and deduct ESCT from
their contributions.
Any arrangement to make KiwiSaver
Is not earning a salary or wage
contributions between the member and
their scheme provider will continue.
Starts a new job, becomes an employee
The member will need to:
and starts earning a salary or wage
Provide the required enrolment
information to their new employer so
that:
Employee deductions will continue
at the requested contribution rate
and
Their employer knows they are
required to make compulsory
employer contributions and deduct
ESCT from their contributions
Contact their scheme provider to
confirm they are now earning a salary or
wage and cancel any contribution
arrangement they had with the scheme
provider
Employee deductions and compulsory
employer contributions (CEC) will stop
from their old job.
Stops earning a salary or wage, eg they
Contact their scheme provider to confirm
become self-employed
they are not earning a salary or wage and
make an arrangement to make KiwiSaver
contributions such as establish an
automatic payment for contributions.
Contributions to KiwiSaver when a member moves
overseas
When a member returns to New Zealand they can re-join KiwiSaver if they’re
eligible. The following applies for KiwiSaver members who move overseas:
Applies to
Description
The member is eligible for the:
$1,000 KiwiSaver Kick-start (if they
Joins KiwiSaver before they go overseas
joined before 21 May 2015)
Government contributions (GVC) until
they leave New Zealand
Is a KiwiSaver member and has since
The member:
moved overseas
Can continue to make voluntary or lump
sum contributions
Is not entitled to receive the government
contributions unless they're a:
New Zealand state sector
employee living overseas, or
New Zealander volunteering or
working overseas for token
payment for a specified charitable
organisation.
Can apply to withdraw their funds and
close their KiwiSaver account after 1 year
if they permanently emigrate (to
countries other than Australia). Refer to
Withdraw KiwiSaver contribution
requests
Member on a savings suspension
Any employer contributions made while the employee is on a savings suspension
or not earning salary or wages will be voluntary and are liable for employer
superannuation contribution tax (ESCT) as normal.
Contributions to KiwiSaver when a member is a
shareholder employee
Companies generally pay out their shareholders at the after the end of the income
year, out of the company’s profits. Companies may choose to pay their
shareholder-employees a salary/wage part way through the income year to help
relieve the end-of-year burden.
Shareholders who are paid salary or wages for less than a full year from a Close
company are subject to the following rules.
They are not required to have KiwiSaver deductions made from their shareholder-
employee’s salary, unless:
they receive the salary or wage payments in regular pay periods throughout
the income year or
they derive 66% or more of their annual gross income from the company in
that income year.
Generally, this means that if a company starts paying a salary to the shareholders
part-way through the income year, they may only have to deduct KiwiSaver from
the start of the next income year. The relationship between the company and the
shareholder doesn't become an employer/employee relationship until the
beginning of the new income year.
Example
A close company makes annual payments to shareholders each year from
the company profits. In August, they decided to start paying their
shareholder-employees a salary/wage. Assuming the company has a 31
March balance date, the legal requirement for the company to deduct KS
from the shareholder-employees doesn't commence until the following 1
April.
A company (or shareholder-employee) may still choose to have deductions/CEC
made from when they start receiving salary/wages.
With the abolition of the ETC claims there is no risk to the revenue.
Contributions refunded to employee and included
on IR348
The trigger for this call is if an employer receives a statement with a debt. Some
employers have:
Refunded employee deductions to their employees when they opt out, and
Displayed the amount of employee deductions on their employment
information form (IR348)
This results in the following:
A debt in the employers account (because they put an employee deduction
amount on their IR348 but didn't make the payment)
The employee receiving a refund from their employer and an automatic refund
from Inland Revenue.
KiwiSaver legislation doesn't allow Inland Revenue to refund the employer. They
will need to retrieve the refund from their employee.
Related reading
KiwiSaver Act 2006
Section 38 Providers must give notice to Commissioner if they contract directly
with members
Section 39 Commissioner must give notice to employer
Part 3 KiwiSaver contributions
Section 66 Obligation to make deductions: general rule
Part 3 Subpart 2 Miscellaneous provisions relating to contributions Inland
Revenue KiwiSaver Holding Account
Section 84 Interest on money in holding account
Section 85 Time when contributions treated as received for interest purposes
Section 90 Position if Commissioner's paying rate changes
Part 3 Subpart 3 Contributions other than deductions from salary or wages
Section 229 Regulations relating to mortgage diversion facility
IR website
KS2 KiwiSaver deduction form
KS3 Your introduction to KiwiSaver - employee information
KS4 KiwiSaver employer guide
External websites
Sorted - KiwiSaver savings calculator
About Te Mātāwai About KiwiSaver Contact us Support Portal
If an employee reaches the age of eligibility to withdraw their funds for retirement (currently 65), regardless of how long they have been a
KiwiSaver member, they will no longer be required to receive employer contributions from their employer.
If an employer chooses to contribute more than the required amount or makes employer contributions when they are not required to (for
example employee on a savings suspension, over 65 years of age and so on) these amounts are voluntary employer contributions (VEC).
KiwiSaver deductions and CEC must start from the next calculation of salary and wages for the employee.
It is the employer's discretion to start or stop deductions if the request is within 3 months of the last change.
Employers must make employer contributions if they have a contractual obligation* to the employee. Otherwise, they can choose to continue or
stop employer contributions for the time the employee is not earning a salary or wages.
*Contractual obligation: An agreement between the employer and employee in which an offer is made and accepted.
Employer Superannuation Contribution Tax (ESCT) - From 1 April 2012 all employer superannuation contributions, including to KiwiSaver
accounts and complying funds, are liable for tax. Employer contributions made prior to this date are exempt subject to some limitations. For
more information, refer to Employer Superannuation Contribution tax (ESCT).
Penalties and interest -
From 1 April 2021 CEC and VEC will be included with all billing items for EMP, for LPP and NPP penalties and UOMI. For
periods on/after 1 April 2009 to 31 March 2021 penalties applied to CEC only. For further information refer to Penalties and interest.
Wage bargaining
An employer or employee may contact about the following employment matters:
Employers negotiating lower pay increases for KiwiSaver members to cover the costs of CEC
Employers incorporating KiwiSaver CEC into total remuneration
Employers who have incorporated KiwiSaver CEC into total remuneration, not increasing them (to non- KiwiSaver member's levels) when
the member is on a savings suspension.
Do not make comments or offer advice to employers or employees about employment related matters.
Refer the customer in all instances to the Ministry of Business, Innovation & Employment, refer to Government contact details.
Employment contracts
Employment contracts which require employees to have a reduction of salary or wage with the compulsory employer contributions to make up
the shortfall will not be valid. If employment contract relating to CEC arrangement from 1 April 2008 is signed:
Before 13 December 2007 - Will not be valid if it requires:
The employee's gross salary or wages to be reduced, and
CEC to be paid to make up that shortfall, this is, it must stipulate that any employer contributions will be in addition to the employee's
gross salary or wages.
On or after 13 December 2007 - May stipulate an arrangement for payment of CEC that has been negotiated as the terms and conditions
of employment and done in 'good faith'.
For more information , refer to KiwiSaver salary sacrifice.
Backdating CEC
To check the employee is entitled to backdated CEC, refer to Backdating compulsory employer contributions.
Employee backpay
Employers must make CEC on backdated payments (backpay) of salary or wages if their employee makes KiwiSaver or complying fund
contributions from them.
Employer Tax Credit (ETC)
This credit applied between 1 April 2008 to 31 March 2009 to help offset the cost of CEC to employers. Refer to Employer tax credit for more
information.
Employer contributes to another superannuation scheme
Some employers may already offer their employees access to a registered superannuation scheme that existed prior to 1 July 2007 (the start of
KiwiSaver) and make employer contributions to that scheme. Employer contributions made to existing superannuation schemes may count as
CEC. For further information on when CEC applies, refer to Contributions to superannuation schemes.
Complying funds - Employer contributions do not/cannot count towards the employee's minimum contribution and are not eligible for
government contributions (GVC).
View CEC and VEC
Compulsory employer contributions (CEC) and voluntary employer contributions (VEC) will show under the employers EMP account
Financial
tab,
Transactions sub-tab (KSR debit and Voluntary KSR debit).
Any voluntary contributions made by an employer will count towards compulsory employer contributions when they are for employees:
Enrolled in a registered superannuation scheme
Under the terms of a collective agreement that was settled before 17 May 2007 (this is, Budget date in 2007).
Calculating CEC
If the employer needs assistance calculating CEC refer them to the PAYE calculator or the relevant PAYE tables (IR340/IR341).
From 1 April 2020, START calculates the CEC using the net employer contribution plus the ESCT amount as a proportion of gross salary or wages
for the pay period. Employer contribution + ESCT is:
0 then we consider the employer to be taxing the employer contribution as PAYE instead of ESCT
Less than or equal to 3.5% of the gross salary or wages (less any exempt income for KiwiSaver purposes) the entire employer contribution
will be deemed to be CEC
Greater than 3.5% of the gross salary/wages (less any exempt income for KiwiSaver purposes), the amount in excess of 3.5% will be
deemed to be VEC and the 3.5% is CEC + ESCT
For the definition of gross salary or wages, refer to Gross salary or wages (KiwiSaver).
Vesting KiwiSaver employer contributions
Employer contributions to existing superannuation schemes will count towards the CEC rate to the extent to which they are vested by the end
of the 5th year. For the definition of vesting refer to the Glossary.
CEC and VEC calculation prior 1 April 2020
IR treated any employer contribution above 2.01% as VEC. The 2.01% was applied to FIRST validation as FIRST could only apply 1 rate. The
2.01% is 3% CEC – minus the highest ESCT rate that was 33%. However, this also means that employees whose ESCT rates were 10.5%, 17.5% or
30% are incorrectly showing with VEC.
([Gross earnings] - [Gross employer contributions adjustment]) * rate
Then CEC = [Net KiwiSaver employer contributions]
> [Net KiwiSaver employer contributions]
Otherwise CEC = ([Gross earnings] - [Gross employer contributions
adjustment]) * rate
VEC = [Net KiwiSaver employer contributions] - CEC
Interest on employer contributions
To check when interest will apply to the contribution, refer to KiwiSaver interest.
IR56 workers
IR56 customers can opt into KiwiSaver by contracting directly with a provider. The following rules apply once they have opted in.
Private domestic workers
IR56 workers who are private domestic workers can
choose to apply the KiwiSaver rules to themselves as
both an employer and an employee.
If a private domestic worker does opt in, they:
Can make deductions of KiwiSaver contributions from their wages
May choose to make CEC if they treat themselves as an employer and record these amounts on their IR348
Need to negotiate with their provider if they wish to take a break from contributing.
Private domestic workers are not liable for ESCT.
All other IR56 workers
IR56 workers who are not private domestic workers can choose to make KiwiSaver deductions and record these on their IR348, however they
are
not entitled to CEC.
For a full list of IR56 workers who are not private domestic workers, refer to IR56 workers.
Related reading
KiwiSaver Act 2006
Part 3 - KiwiSaver contributions
Section 63A - How subpart applies to private domestic workers
Section 66 - Obligation to make deductions: general rule
Subpart 2 - Miscellaneous provisions relating to contributions Inland Revenue KiwiSaver Holding Account
Section 101D - Compulsory employer contribution amount: general rule
IR website
Employer contributions to KiwiSaver and complying funds
About Te Mātāwai About KiwiSaver Contact us Support Portal
making voluntary contributions
asking their employer to start or stop deductions
start/stopping within 3 months of the last change can only be done if the
employer agrees
starting employee deductions means the employee is eligible for employer
contributions and government contributions (GVC).
Any KiwiSaver funds received while on a Savings suspension will still pass as normal
to the scheme provider.
Related reading
KiwiSaver Act 2006
Section 102 Who may apply for a savings suspension
Section 22 Employees giving information to employers
IR website
Taking a savings break
About Te Mātāwai About KiwiSaver Contact us Support Portal
