Employers impacted by upcoming ESCT change
Just a reminder that many employers will be impacted by the removal of the tax free status of employer contributions to KiwiSaver funds with effect from 1 April 2012. Employer Superannuation Contribution Tax (ESCT) will need to be calculated on all employer cash contributions (including KiwiSaver schemes) to superannuation funds from this date. Some employers may already be deducting this tax because they have their own superannuation fund which didn’t qualify for the exemption or they may have been making contributions in excess of 2 per cent. However, for many employers, this will be a new tax to deal with.
This change was announced in Budget 2011 (see our full article from the June Tax Alert 2011). There will be some compliance for employers in working out the rate to deduct at and passing this tax back to the Government, but otherwise this tax is borne by the employee and reduces the value of the amount that ends up in the KiwiSaver scheme.
For more information on these changes, please contact your usual Deloitte tax advisor.