How it's calculated
Beyond the salary itself, a New Zealand employer's statutory costs are the KiwiSaver employer contribution and the ACC Work levy. PAYE, the ACC earners' levy and the employee's own KiwiSaver come out of the employee's pay, so they are not extra costs for the employer.
KiwiSaver employer contribution
If the employee contributes to KiwiSaver or a complying fund through their pay, you must contribute at least 3.5% of their gross salary or wages for paydays from 1 April 2026, on top of their pay. The minimum rises to 4% for paydays from 1 April 2028.Inland Revenue
- 16- and 17-year-olds are eligible for employer contributions from 1 April 2026. You don't have to contribute for employees under 16, or once Inland Revenue tells you the employee has reached their withdrawal date.Inland Revenue
- Temporary rate reduction. An employee who can't afford the higher rate can apply to keep contributing 3% for 3 to 12 months. You can choose to match that reduced rate, but you don't have to.Inland Revenue
ESCT comes out of the contribution
Employer superannuation contribution tax (ESCT) is deducted from the employer contribution and paid to Inland Revenue with your PAYE. It is not added on top, so your cost is the gross contribution and the employee's account receives the gross amount less ESCT. The rate depends on the employee's salary plus employer contributions for the previous tax year:Inland Revenue
| Salary plus employer contributions | ESCT rate |
|---|---|
| Up to $18,720 | 10.5% |
| Up to $64,200 | 17.5% |
| Up to $93,720 | 30% |
| Up to $216,000 | 33% |
| Over $216,000 | 39% |
You work out the rate at 1 April and keep it for the whole tax year. For a defined benefit fund you can choose a flat 39%.
ACC Work levy
Businesses pay ACC Work Account levies on their employees' earnings. The rate depends on your business's ACC classification unit, so there is no single figure: enter your own rate per $100 of liable earnings. For 2026–27 it applies to each employee's earnings up to $156,641.Inland Revenue
The formula
For each pay (Inland Revenue's payroll rules):
- Employer contribution = gross pay × employer rate, cut to whole cents.
- ESCT = the contribution in whole dollars × ESCT rate, cut to whole cents.
- Into KiwiSaver = step 1 − step 2.
For the year:
- ACC Work levy = the lower of salary and $156,641 × your rate ÷ 100.
- Total cost = salary + employer contributions (step 1 × pays) + ACC Work levy + other costs.
If your agreement sets a net contribution (the amount that must reach the fund), it is grossed up: ESCT = rate ÷ (1 − rate) × net contribution.Inland Revenue
Worked example
| Line | Year | Month |
|---|---|---|
| Gross salary | $70,000.00 | $5,833.33 |
| Employer KiwiSaver (3.5%) | $2,449.98 | $204.17 |
| Total cost | $72,449.98 | $6,037.50 |
Of the $2,449.98 contributed over the year, ESCT at 30% takes $733.20, so $1,716.78 reaches the employee's account.
A $200,000 employee with an ACC Work levy rate of $1.00 per $100 adds $1,566.41 of levy, because only earnings up to the maximum are levied.
With Inland Revenue's own grossing-up example, a 5% net contribution on a $70,000 salary, the contribution costs $5,000.00 a year, including $1,500.00 of ESCT.
Assumptions and limitations
- ESCT rate is estimated from this year's salary plus employer contributions. You set it from the previous tax year (or an estimate for a new employee), so it can differ if pay changed. Choose the rate under advanced options to override it.
- Contributions treated as salary. If you and the employee agree, all or part of the employer contribution can be taxed as salary or wages under PAYE instead of ESCT. That option isn't modelled here.
- ACC Work levy uses the rate you enter and adds no GST. Check the rate on your ACC invoice. Levies for self-employed people are not covered.
- Not included: holiday pay and leave cover, sick leave, training, equipment and recruitment, unless you enter them under other costs.
For the employee's side of the same pay, use the PAYE calculator or the KiwiSaver calculator.