What is ESCT?
ESCT is short for Employer Superannuation Contributions Tax, and is a withholding tax on the superannuation payments an employer makes on behalf of an employee.
Ace Payroll automatically deducts the relevant ESCT each pay period. When you pay your Pay As You Earn tax (PAYE), the ESCT is included as part of the PAYE on the IR345 form, but does not appear on the IR348 form.
The ESCT rate can be entered manually or calculated using the employee’s marginal tax rate. Ace Payroll calculates this for you automatically by estimating the employee’s annual earnings. Letting Ace Payroll calculate the ESCT rate means that if your employee’s annual earnings change, the rate is automatically adjusted.
ESCT on your IRD returns
ESCT amounts are included in the EI return files you submit for payday filing. Payday filing is compulsory from 1 April 2019. More on payday filing...
The following information applies to reporting pays prior to 1 April 2019.
The ESCT shows in box 8 of the IR345, but does not show at all on the IR348. There is no way to show the ESCT on the IR348 — Inland Revenue have intentionally designed the forms this way. Because of this, the figures on the IR348 no longer match the figures on the IR345. You must file both forms when you file your monthly return with Inland Revenue.
This makes it vital to
(a) submit your IR345 and your IR348, and
(b) ensure that you use the IR345 total (Box 9) when making your payment to the IRD. More on the ESCT and monthly returns...
ESCT calculation for KiwiSaver
Employer contributions to KiwiSaver funds are subject to the ESCT, which Ace Payroll deducts automatically. The rate band for each employee is based on their previous or estimated earnings. More on ESCT calculation...
KiwiSaver is a superannuation savings plan to help people set up for retirement. Members pay a percentage of their wage into the fund each pay cycle, and employers contribute a percentage as well.
The plan is voluntary, but new employees who are not already members are automatically enrolled and must opt out if they don’t want to participate. More on KiwiSaver...
Frequently asked questions
The ESCT can be confusing. We've compiled a list of frequently asked questions to help you out. Frequently asked questions about the ESCT...