Salary Sacrifice and Total Remuneration in New Zealand

Q: What is a total remuneration package?

A total remuneration package is one where the compulsory employer KiwiSaver contribution is included in the salary figure you were quoted rather than paid on top of it. A $70,000 total remuneration package with a 3.5% contribution means a gross salary of $67,632.85 and an employer contribution of $2,367.15.

Q: How do I work out the salary inside a total remuneration package?

Divide the package by 1 plus the employer contribution rate. At 3.5% that means dividing by 1.035. Do not take 3.5% off the package: that gives the wrong answer, because the contribution is a percentage of the salary, not of the package.

Q: Does ESCT still apply on a total remuneration package?

Yes. The contribution is still an employer superannuation contribution, so ESCT is charged on it in the usual way. The only thing that has changed is where the money came from.

Two things people mean by the same phrase, only one of which exists here. Figures use 2026–27 rates and tax code M with no student loan.

Salary sacrifice does not work in New Zealand the way it does in Australia. Your KiwiSaver deduction comes out of pay that has already been taxed, so raising your rate never lowers your PAYE. Total remuneration is different: the employer contribution sits inside your stated salary instead of on top.

Why salary sacrifice does not reduce your tax here

The Australian arrangement diverts salary into superannuation before income tax touches it, which is why the phrase carries a promise of a smaller tax bill. New Zealand has no equivalent for KiwiSaver. Your contribution is calculated as a percentage of gross pay, but it is deducted from what is left after PAYE. The tax is worked out on the full gross either way.

PAYE at two different KiwiSaver rates on the same salary
On a salary of $70,000	At 3.5%	At 10%
Gross pay	$70,000.00	$70,000.00
PAYE, income tax and the ACC levy	$14,445.50	$14,445.50
Your KiwiSaver contribution	$2,450.00	$7,000.00
Take-home pay	$53,104.50	$48,554.50

The PAYE row does not move. Contributing $4,550.00 a year more costs you exactly $4,550.00 a year of take-home pay, and saves you nothing in tax. Every dollar you put into KiwiSaver has already been taxed as income.

What total remuneration actually means

This is the arrangement New Zealanders usually mean when they say salary sacrifice, and it is not a tax arrangement at all. It is a question about where a number came from. Normally the compulsory employer contribution is paid in addition to your gross pay. On a total remuneration package the number you were quoted already contains it.

To find the salary inside a package, divide by 1 plus the employer rate. Not by subtracting the rate, which is the mistake almost everyone makes.

$70,000 ÷ 1.035 = $67,632.85 of gross salary, plus $2,367.15 of employer contribution.

Subtracting 3.5% from $70,000 gives $67,550.00, which is $82.85 too low. The contribution is a percentage of the salary, not of the package.

The rules set the default the other way round. The compulsory contribution is payable on top of your gross salary or wages unless you and your employer have agreed otherwise, that agreement has to be reached in good faith, and it belongs in the employment agreement in writing. A package described only as $70,000 with no mention of KiwiSaver is not a total remuneration package.

What the same headline number is worth, both ways

Two offers, both described as $70,000. One pays the employer contribution on top, the other includes it. Both assume the default 3.5% employee rate and tax code M.

A $70,000 offer with the employer contribution on top, against the same figure as a total remuneration package
Per year	$70,000 plus KiwiSaver	$70,000 including KiwiSaver
Gross salary	$70,000.00	$67,632.85
Employer contribution	$2,450.00	$2,367.15
ESCT at 30%	− $735.00	− $710.10
Your own contribution	$2,450.00	$2,367.15
Into your fund for the year	$4,165.00	$4,024.20
Take-home pay	$53,104.50	$51,571.77

The total remuneration version costs $1,532.73 a year of take-home pay and $140.80 a year of retirement savings, for the same headline figure. That is $1,673.53 a year, or 2.39% of the package, and it turns entirely on one preposition in an offer letter.

What to look for in an offer

The two phrases that matter are plus KiwiSaver and including KiwiSaver. An offer that says neither is quoting a gross salary, and the compulsory contribution is on top of it by default. Wording worth reading twice: total remuneration, total fixed remuneration, TFR, package, and inclusive of employer contributions.

If a package is total remuneration, the number that matters for every other calculation on this site is the gross salary inside it, not the package. Your take-home pay, your student loan repayments and your ACC earners' levy all come off the salary, never off the package.

The one thing that does change your tax

There is a single arrangement in the rules that moves a superannuation contribution across the tax line, and it moves it the other way. You and your employer can agree that an employer contribution is treated as salary or wages, in which case PAYE applies to it instead of ESCT. That raises your gross pay, your ACC earners' levy and any student loan deduction. It is the opposite of a sacrifice, and it is the only route by which the tax on an employer contribution changes at all. employer superannuation contribution tax.

KiwiSaver employer contributionWhy 3.5% on top is the default
KiwiSaver employer contribution calculatorRun your own salary through both versions
ESCT rates 2026–27The tax that applies either way
KiwiSaver contribution ratesWhat each employee rate costs your take-home pay

Common questions

Does salary sacrifice exist in New Zealand?

Not in the sense used in Australia. There is no arrangement that lets you divert salary into KiwiSaver before income tax. Your contribution is worked out on gross pay but taken from pay that PAYE has already come out of, so your tax bill is identical at every contribution rate.

What is a total remuneration package?

One where the compulsory employer contribution is inside the salary figure you were quoted rather than on top of it. A $70,000 package at 3.5% means a gross salary of $67,632.85 and an employer contribution of $2,367.15.

Is total remuneration legal in New Zealand?

Yes, where it is agreed. The default rule is that the compulsory contribution is paid in addition to your gross pay. An employer and employee can agree different terms, and that agreement is what a total remuneration package is. It has to be reached in good faith, and it belongs in writing in the employment agreement.

How do I work out the salary inside a total remuneration package?

Divide the package by 1 plus the employer rate, so at 3.5% that is dividing by 1.035. Do not subtract 3.5% from the package. The contribution is a percentage of the salary, not of the package, so subtracting gives a figure that is slightly too low.

Does ESCT still apply on a total remuneration package?

Yes. It is still an employer superannuation contribution, so ESCT applies in the usual way. The only thing that changed is where the money came from.

Where these figures come from

2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.

KiwiSaver employer contributionThe 3.5% that is normally on top
KiwiSaver contribution ratesEvery employee rate, and what each costs
ESCT rates 2026–27Charged either way, on top or inside
gross vs net payWhich figure an offer is actually quoting
take-home pay calculatorWhat either version of the offer pays you