Changes made in the budget 2012 will come into effect 1 April 2013
The minimum contribution rate for employers and employees increases from 2% to 3% of gross salary or wages from the first pay period commencing on or after 1 April 2013. As an employee you can still select to pay a higher contribution of 4% or 8%.
If you are under 18, enrolled for KiwiSaver and receive a wage you must make KiwiSaver employee contributions, but employers do not need to make the employer contrbution of 3%.
1st July 2012 - 5 years anniversary
KiwiSaver reached its five-year anniversary on 1 July 2012 and you may be eligible to withdraw your funds from that date.
You may withdraw funds from KiwiSaver once you either qualify for New Zealand Superannuation (currently age 65) or reach the date of your fifth anniversary of membership, whichever is the latter. For example, if you joined KiwiSaver at age 63 then you are not eligible to withdraw until after five years, when you turn 68.
We recommend that you check your 'start date' with your scheme provider and ensure they have your correct date of birth and contact details
Tax Changes 1st April 2012
Government contribution to half contributing 50c for every $1 contributed by individual, to a maximum of $521.43 per year
Employers contribution to be taxed at a rate equal to the individuals marginal tax rate. From the 1st April 2012 employers contribution will no longer be exempt from ESCT (Employer Superannuation Contribution Tax).
This will not cost the employer any more. The tax amount will be deducted from their Kiwisaver contribution.
This calculation is done once a year on 1 April, and is based on gross earnings for the previous 12 months.The calculation for Kiwisaver does not include the rent (accommodation or board) portion of gross taxable earnings.
Keep a record of all calculations. Inland Revenue Department may query the rate being used. The first return under this regime will be for the period 1 – 30 April 2012, due for filing and payment with Inland Revenue Department on 20 May 2012.
The Employer Monthly Schedule (EMS/IR348) will have an additional box (8) to record the ESCT amount for each employee.
The Employer Deduction Schedule (EDF/IR345) will record this in box 8
https://interact1.ird.govt.nz/forms/payecalculator/ PAYE/Kiwisaver calculator (make sure you select the correct income tax year)
Budget May 2011 affects KiwiSaver.. more
Retirement planning is important. All New Zealand residents and people entitled to live here permanently up to the age of 65 are eligible for KiwiSaver. All new eligible employees must be automatically enrolled in KiwiSaver. However there are some employees who are exempt from automatic enrolment. These include:
- Those under 18 years of age
- Casual agricultural workers or Election Day workers
- Private domestic workers
- Casual and temporary employees employed under a contract of service that is 28 days or less
All eligible existing employees can join the scheme at any time they wish by notifying their employer.
There are 3 employee contributions rates, being 2%, 4% or 8%. The employee can elect the rate at which they want their contributions deducted. If an employee does not elect a rate then the default rate of 2% will be used by the employer for contribution deductions made.
The mimimum employee contribution rate will increase to 3% from 1st April 2013.
Compulsory Employer Contributions
From 1st April 2008 it became compulsory for employers to contribute to their employees’ KiwiSaver scheme.
This compulsory contribution is curently 2%. This is due to increase to 3% from 1st April 2013.
From 1st April 2012 the employers contribution will be taxed.
The government also:
- Contributes $1,000 (tax free) when a member first joins
- Pays annual member tax credit (for those 18 and over) of up to $1,042.86. This is to reduce to $520 from, 1st July 2011
- Funds first home deposit subsidy through Housing NZ if the relevant criteria are met
Note: There is no Crown guarantee of KiwiSaver schemes or investment products of KiwiSaver schemes.
- Give new employees and other existing staff who are interested an Employee information pack (KS3)
- Pass employees' details to Inland Revenue to enable them to be enrolled
- Deduct contributions from employees' gross salary and pay these to IRD through the PAYE system
For more information on KiwiSaver and how this may apply to you give us a call or refer to the KiwiSaver for Employers information available on the IRD website.
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