Employer Superannuation Contribution Tax (ESCT) is tax deducted from your employer’s KiwiSaver contributions before they reach your account. While your employer is required to contribute a minimum of 3.5% of your gross salary to KiwiSaver (rising from 3% on 1 April 2026), a portion of that is withheld as ESCT — meaning you receive less than the full amount.
ESCT is deducted from your employer's KiwiSaver contributions at a rate set by your salary plus employer contributions for the previous year (10.5% to 39%). On a $70,000 salary, your employer contributes the 3.5% minimum = $2,450, but ESCT at 30% = $735 is deducted first. You receive $1,715 net into your KiwiSaver account. Your employer pays ESCT to IRD on your behalf. The ESCT rate is based on your income from the previous year.
What Is ESCT?
ESCT is a tax applied to employer contributions to KiwiSaver (and other registered superannuation schemes). It is deducted from the employer contribution before it reaches your KiwiSaver account.
ESCT ensures that employer KiwiSaver contributions are taxed — just as salary is taxed through PAYE. Without ESCT, employer contributions would be tax-free income.
ESCT Rates
ESCT is deducted at a rate based on your income from the previous year (salary + employer KiwiSaver contributions). Thresholds increased from 1 April 2025 in line with the 31 July 2024 personal income tax changes:
| Previous year’s income (approx.) | ESCT rate |
|---|---|
| $0–$18,720 | 10.5% |
| $18,721–$64,200 | 17.5% |
| $64,201–$93,720 | 30.0% |
| $93,721–$216,000 | 33.0% |
| $216,001+ | 39.0% |
Note: The ESCT thresholds are slightly different from income tax brackets because they include employer contributions in the base.
How ESCT Affects Your KiwiSaver
The employer’s minimum gross contribution is 3.5% of your salary (from 1 April 2026, up from 3%). However, ESCT is deducted before it reaches you:
| Salary | Employer 3.5% contribution | ESCT rate | ESCT amount | Net to your KiwiSaver |
|---|---|---|---|---|
| $45,000 | $1,575 | 17.5% | $276 | $1,299 |
| $60,000 | $2,100 | 17.5% | $368 | $1,732 |
| $70,000 | $2,450 | 30.0% | $735 | $1,715 |
| $90,000 | $3,150 | 30.0% | $945 | $2,205 |
| $120,000 | $4,200 | 33.0% | $1,386 | $2,814 |
Who Pays ESCT?
Your employer pays ESCT to IRD — it comes out of the employer contribution, not from your wages. Your employer:
- Calculates the gross employer contribution (3.5% minimum of your salary)
- Deducts ESCT at the applicable rate
- Sends the net amount to your KiwiSaver provider
- Sends the ESCT amount to IRD on your behalf
You do not see ESCT on your payslip as a separate deduction — it is already removed before the employer contribution reaches your KiwiSaver.
ESCT vs Employee Contributions
Employee contributions (3.5%–10% of gross salary deducted from your wages, from 1 April 2026) are different:
- They are deducted from your gross pay, but PAYE is calculated on your full gross salary — including the portion that goes to KiwiSaver. Your employee contribution does not reduce your taxable income.
In practice:
- Employer contributions: Taxed via ESCT (employer pays the tax, deducted before the money reaches your account)
- Employee contributions: Come out of pay that has already been fully taxed via PAYE — there is no separate tax on the employee contribution itself, but it also isn’t tax-deductible
Frequently Asked Questions
Why do I receive less than 3.5% of my salary in KiwiSaver employer contributions?
Because ESCT is deducted from the employer contribution. Your employer paid the full 3.5%, but a portion went to IRD as ESCT. The net amount credited to your account is after this tax.
Does ESCT affect the government contribution?
No. The government contribution (up to $260.72/year, 25 cents per dollar you contribute, from 1 July 2025) is based on your own contributions, not the employer’s. ESCT has no impact on your government contribution entitlement.
Can I opt out of ESCT?
Not as an employee choice. Employers deduct ESCT from their contributions to KiwiSaver and complying funds. The one exception is if you and your employer agree to treat some or all of the employer contributions as salary or wages under the PAYE rules: that money is then taxed through PAYE instead (IRD: KS4 employer guide).
Does ESCT apply to voluntary employer contributions above the 3.5% minimum?
Yes. Any employer contribution to a registered superannuation scheme, whether mandatory (3.5% minimum from 1 April 2026) or voluntary (above the minimum), is subject to ESCT, unless you and your employer have agreed to treat it as salary or wages under the PAYE rules.