ESCT: Employer Superannuation Contribution Tax
ESCT is employer superannuation contribution tax. It is the tax your employer pays on the KiwiSaver contribution they make for you, at 10.5% to 39%, depending on your previous year's earnings. It comes out of their contribution before it reaches your account, never out of your pay.
What ESCT actually is
Your employer contributes to your KiwiSaver account on top of your salary. That contribution is income to you in every meaningful sense, so it is taxed. Rather than run it through your payslip and tax it as wages, the rules tax it at source: your employer works out the tax, holds it back from the contribution, and pays it to Inland Revenue at the same time as their PAYE.
The practical consequence is the part almost nobody is told. Your employer contributes 3.5% of your gross pay, but somewhere between 2.14% and 3.13% of your gross pay is what actually arrives in your fund. The gap is ESCT, and the size of the gap depends entirely on which of the five bands you land in.
Nothing about this is a deduction from you. Your gross pay is unchanged, your take-home pay is unchanged, and no line on your payslip moves. That is exactly why so few people know the tax exists.
Where ESCT sits in the payslip waterfall
Every other deduction runs down a single line from gross pay to the money in your account. ESCT runs on a parallel line above it, on money that was never part of your gross pay to begin with.
Your line
Gross pay → PAYE (income tax and the ACC earners' levy) → your KiwiSaver deduction → student loan → take-home pay
The parallel line
Employer contribution (3.5% of gross) → ESCT → the amount that reaches your fund
The two lines are settled in the same payment to Inland Revenue and reported in the same employment information filing, which is why ESCT is a sibling of PAYE rather than a part of KiwiSaver. It applies to complying funds and other employer superannuation schemes too, not only to KiwiSaver.
Your details
3.5% is the compulsory minimum from 1 April 2026. Some employers pay more.
Assuming a threshold amount of $72,450.00. That is this year's gross plus the employer contribution, which is what payroll estimates when you have not been with the employer for a full previous tax year.
Your ESCT rate
Threshold amount $72,450.00
ESCT a year
Taken from the contribution
Reaches your account
2.45% of your gross pay
What happens on each payday
| Frequency | Employer | ESCT | Your fund |
|---|---|---|---|
| Weekly | $47.12 | − $14.10 | $33.02 |
| Fortnightly | $94.23 | − $28.20 | $66.03 |
| Monthly | $204.17 | − $61.20 | $142.97 |
| Annual | $2,450.00 | − $735.00 | $1,715.00 |
On a fortnightly cycle the $94.23 contribution is treated as $94.00 for the ESCT calculation. The cents are not taxed, and they are not lost either: they still go into your fund.
No take-home pay calculator in New Zealand puts the employer contribution and ESCT on the payslip, per payday. Every other tool that knows about ESCT is either employer payroll administration or a projection of your balance at 65. This one shows the money on the day it moves.
How your ESCT rate is chosen
Your rate is not set by what you earn this year. It is set by the ESCT rate threshold amount, which is last year's gross pay from that employer plus the gross employer superannuation contributions they made for you in that year. Your employer works it out once, at the start of the tax year, and it does not move again until 1 April even if you get a pay rise in September.
| ESCT rate threshold amount | ESCT rate |
|---|---|
| $1 – $18,720 | 10.5% |
| $18,721 – $64,200 | 17.5% |
| $64,201 – $93,720 | 30% |
| $93,721 – $216,000 | 33% |
| $216,001 and over | 39% |
The effective rate each band leaves on a 3.5% contribution, and what $100 of employer contribution actually delivers, are set out on ESCT rates 2026–27.
Two people on identical salaries can therefore be on different ESCT rates, because one of them was earning less a year ago. A new employee has no previous year with that employer at all, so the employer estimates instead. ESCT rates 2026–27.
Example. $70,000 a year with the minimum employer contribution
- 1.Your gross pay for the yearUnaffected by anything below. ESCT never touches it$70,000
- 2.Employer contribution at 3.5%Paid on top of your salary, not out of it+ $2,450.00
- 3.ESCT rate threshold amountYour pay plus the employer contribution$72,450.00
- 4.ESCT at 30%Held back by your employer and paid to Inland Revenue− $735.00
- Reaches your KiwiSaver account$1,715.00
$1,715.00 is 2.45% of gross pay, not 3.5%. The threshold amount of $72,450.00 lands in the 30% band, and note that it is the employer contribution being added to the salary that pushes it there. A salary just under a band edge can be tipped over it by the contribution itself.
What ESCT does and does not apply to
ESCT applies to
- The compulsory 3.5% employer contribution to your KiwiSaver scheme.
- Anything your employer contributes above that minimum.
- Employer cash contributions to a complying superannuation fund or another superannuation scheme.
- Voluntary employer contributions made after you turn 65, when the compulsory contribution has stopped but your employer keeps paying.
ESCT does not apply to
- Your own KiwiSaver deduction. It comes out of pay that PAYE has already been taken from.
- The government contribution of up to $260.72 a year.
- Anything at all during a savings suspension, because the employer contribution stops as well.
- Investment returns inside your fund. Those are taxed at your prescribed investor rate, which you give to your scheme provider rather than to your employer.
Can you get out of paying ESCT?
There is one route in the rules, and it is not an exemption. You and your employer can agree that a superannuation contribution is treated as salary or wages instead, in which case PAYE applies to it in place of ESCT. That changes which tax applies, not whether tax applies, and it changes your gross pay, your ACC earners' levy and any student loan deduction with it.
Everything else people suggest does not work. Changing your own contribution rate does not move ESCT, because ESCT is charged on your employer's contribution and the compulsory minimum is the same whether you contribute 3.5% or 10%.
Next
- ESCT rates 2026–27The full table, the effective rate on each band, and the superseded rates still circulating
- KiwiSaver employer contributionWhat the 3.5% minimum covers, and who it applies to
- salary sacrifice and total remunerationWhen the employer contribution comes out of your stated salary
- KiwiSaver contribution ratesEvery employee rate, and the one you cannot simply pick
Common questions
What does ESCT stand for?
Employer superannuation contribution tax. It is the tax an employer pays on the cash contributions they make to your KiwiSaver scheme, complying fund or other superannuation scheme. Your employer deducts it from the contribution and pays it to Inland Revenue with their PAYE.
Who pays ESCT, the employer or the employee?
The employer pays it, and the employer remits it. The cost still lands on you, because ESCT is taken out of the contribution rather than added to it. A 3.5% employer contribution is worth between 2.14% and 3.13% of your gross pay once ESCT has come off.
Is ESCT deducted from my wages?
No. ESCT never touches your gross pay and never appears as a deduction line on your payslip. It comes out of the separate contribution your employer makes on top of your salary. Your own KiwiSaver deduction is a different line, and ESCT does not apply to it.
What is the ESCT rate threshold amount?
It is the figure that decides which of the five rates applies. For an employee who worked for the same employer across all of the previous tax year it is that year's gross pay plus the gross employer superannuation contributions made for them. For everyone else the employer estimates the current year instead. Either way it is fixed at the start of the tax year. ESCT rates 2026–27.
Does ESCT apply to my own KiwiSaver contributions?
No. Your own contribution is calculated on gross pay but taken out of money that has already had PAYE deducted, so it has already been taxed as income. ESCT applies only to the contribution your employer makes.
Does ESCT apply to complying funds and other super schemes?
Yes. ESCT applies to employer cash contributions to KiwiSaver schemes, complying superannuation funds and other superannuation schemes. That is why it sits alongside PAYE rather than inside KiwiSaver. It is not a KiwiSaver rule, it is a superannuation rule.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- ESCT rates 2026–27All five bands, with the effective rate on each
- KiwiSaver employer contributionThe 3.5% ESCT is charged on
- KiwiSaver employer contribution calculatorWhat lands in your fund, per payday
- KiwiSaver contribution rates3.5% default, plus 4, 6, 8 and 10%
- how to read a New Zealand payslipWhy ESCT is not one of the lines
- what is PAYEThe payment ESCT is remitted alongside