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Ensuring allowances apply to Kiwisaver correctly (New Zealand)

When an employee is making Kiwisaver contributions, the Gross Taxable Earnings is what the contribution is calculated on. The Gross Taxable Earnings is commonly made up of items like wages, salary, allowances and leave. In certain circumstances, items would not be included in the Gross Taxable Earnings, such as Redundancy.

The Inland Revenue will sometimes write to an employer stating that Kiwisaver contributions are underpaid for particular employees. When a pay is being processed and the Kiwisaver contribution is not calculating the correct amount, it is often caused by an allowance not being included in the Gross Taxable Earnings figures being used for the Kiwisaver calculation.

In the setup of the Allowance, the option "Add to Gross for Kiwisaver" determines whether the value of the allowance will be added to the Gross Taxable Earnings figure or excluded. If the allowance should be applied to the Gross Taxable Earnings then the option should be ticked and if the allowance should not be applied then the option should be unticked.

Typically, most items in an employees pay should be part of the Kiwisaver calculation, including any "Taxable" allowances. If in doubt, refer to the Inland Revenue website or helpline (0800 377 774).

Need more help? You can open the online help by pressing F1 on your keyboard while in your software.

You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.

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