ESCT Rate Updates
The ESCT Rate that applies to an employee will be calculated in the first pay of each new financial year. It will display in the ESCT Rate % section of Users > Employees > select the employee > Tax & Super.
Depending on the employee’s earnings (or estimated earnings, they are allocated an ESCT rate, as outlined below:
|Annual Earnings for previous FY||ESCT Rate %|
|$0 - $16,800||10.5%|
|$16,801 - $57,600||17.5%|
|$57,601 - $84,000||30%|
|$84,001 - $216,000||33%|
How is an ESCT Calculated?
The ESCT rate is determined by whether the employee has:
- worked for the full previous financial year
- not worked for the full previous financial year
- just commenced employment with an employer
If an employee has worked the full financial year prior, the ESCT rate will be calculated based on their Annual Earnings for the previous financial year.
- This is calculated as Gross Earnings + Employer KiwiSaver Contributions.
The ESCT Rate for an employee who did not work the full financial year prior uses their estimated annual earnings.
- This is calculated as (Gross Earnings + Employer KiwiSaver Contributions for the previous financial year) / part or full weeks worked in the previous financial year X the number of weeks in the new financial year.
When an employee has just commenced employment, their ESCT rate is calculated based on their estimated annual earnings.
- This is calculated as (Gross Earnings + Employer KiwiSaver Contributions) / days worked X days in the tax year.
- For example, if an employee earns $1000 for 1 week (7 days) and gets 3% employer contributions, then ($1000 + $30) / 7 * 365 = estimated annual earnings of $53707, so an ESCT rate of 17.5% would be applied.
Manually Setting the ESCT Rate for an Employee
If the earnings calculation is not indicative of what the employee is likely to earn in the new financial year, you can manually override the ESCT Rate set for the employee.
Go to Users > Employees > select the employee > Tax & Super.
Enter the manual % under Manual ESCT Rates.