Payroll Changes for 1 April 2012

Grange Associates Ltd - 7 March 2012

There are a number of changes impacting on employers that come into effect on 1 April 2012.  Essentially these are:

Changes to KiwiSaver Compulsory Employer Contributions - Employer Superannuation Contribution Tax (ESCT)

Compulsory KiwiSaver employer contributions of 2% were previously exempt from ESCT.  This exemption is removed from 1 April 2012.  ESCT will now need to be deducted on all employer contributions to KiwiSaver and complying superannuation funds.  The compulsory contribution remains at 2% but it will now be net of ESCT deducted.

ESCT will be included and paid on your Employer Deduction Form IR345 (monthly PAYE return).  Employer contributions will now be recorded on the Employer Monthly Schedule IR348 as a net amount (gross contribution less ESCT deducted).

You will need to determine the correct ESCT rate for each employee, based on either:

  • For employees employed for the last full tax year, the annual salary or wages, plus gross employer cash contributions paid to the employee in that tax year, or
  • For employees not employed for the last full tax year, an estimate of the total salary or wages plus gross employer cash contributions that the employee is likely to earn in the year ahead
Annual Employee Salary & Contributions  ESCT Rate 
$0 - $16,800  10.5% 
$16,801 - $57,600   17.5% 
$57,601 - $84,000  30% 
$84,001 and above  33% 

Also remember that the KiwiSaver Member Tax Credit has been halved for the year ended 30 June 2012.  The Government now contributes 50c for each $1 contributed by individual KiwiSaver members, to a maximum of $521.43 per year.  The maximum for previous years was $1,042.86.

ACC Levy Rate Reduction

The current ACC levy rate of $2.04 per $100 of earnings will reduce to $1.70 per $100 of earnings from 1 April 2012.  So ensure that you are using new PAYE tables to calculate employee’s wages and deductions, as these will change due to the rate reduction.

Student Loan Tax Code

All student loan borrowers will be required to use a student loan (SL) tax code from 1 April 2012, regardless of earnings, unless they provide their employer with a repayment deduction exemption certificate.

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All information is correct at the date of article publication. Please note we provide the information as a service only. Accordingly, the contents are not intended as a substitute for specific professional advice and should not be relied upon for that purpose.   

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