Note that this starts after the first full pay period for April.

 

This means for a pay period starting in March and ending in April, 2% is still the minimum.

For a pay period starting in April, 3% is the minimum.

 

Here is an example: The pay period for ABC Co Ltd starts 28 Mar 2013 and ends 3 April 2013. The minimum for KiwiSaver for this pay period is 2%. The next pay period for ABC Co Ltd starts on 4 April, so it is in this pay period and subsequent that the minimum of 3% applies.

 

This is different to tax rate changes which apply from the first pay period ending in April of any year.

 

We know this sounds a bit confusing!! but it is what is required by the IRD.
But don't worry - Payroll Pro will automatically use the correct rates and minimums based on the pay period end date.

 

Click here for more information about this

 

Note that for M SL and ME SL, the employee does not pay a standard student loan amount if their weekly earnings are $367 or lower. This is called the weekly threshold.

Weekly threshold is $367

Fortnightly threshold is $734 ($367 * 2)
Four-weekly threshold is $1,468 ($367 * 4)

Monthly threshold is $1,590.33 ($367 * 52 / 12)

 

Example 1:

Employee earns $467 this week, and is on the M SL tax code.

The threshold is $367, so the amount to calculate the repayment on is $467 less $367 = $100

Therefore the Student Loan Repayment amount (from April 2013) is $100 * 12% = $12.

 

Example 2:

Employee earns $350 this week, and is on the M SL tax code.

This is below the threshold of $367, so the employee has no student loan deduction this week.

 

 

HOWEVER the M SL and ME SL employees will have a student loan deduction even if they do earn less than $367 in the week if they have the additional student loan codes SLCIR or SLBOR. These were introduced last year - a summary is below. In addition IRD may request a special deduction rate (SDR) in some cases.

 

 

SLCIR and SLBOR

These were introduced in April 2012.

 

SLCIR is "Commissioner deduction" and is used for required additional student loan repayments.

SLBOR is "Borrower deduction" and is used for voluntary additional student loan repayments.

 

IRD will advise you if additional deductions are to be made using SLCIR.

For SLBOR deductions, the employee will advise their employer if they wish to make additional payments to reduce their loan balance.

 

You can enter the SLCIR and/or SLBOR amounts under "Enter Current Pay", where you will see three new white boxes under the Tax Code:

 

Click on the relevant box to enter the requried figures.

 

The S.D.R. box is for "Special Deduction Rate", which is another Student Loan rate you will use only if advised by the IRD.

 

Special Note on SLCIR Rate

SLCIR has a maximum of 5%. The IRD will advise if you need to use this for an employee.

We have found that the IRD are advising that SLCIR is to be 41.67% of the standard rate. By this they mean 41.67% of 12% which is 5%, so you will enter 5% into Payroll Pro. The reason Payroll Pro requires you to enter 5% and not 41.67% is because that is the requirement of the IRD for computerised payroll systems.

 

 

The ACC Earner Levy is a component of the PAYE.

The maximum income to which the ACC Earner Levy is applied is increased to $116,089, giving a maximum levy of $1,973.51. Previously this maximum income was $113,768.00 so this change only effect employees who earn more than $113,768.00.

This change will automatically come into effect when you enter a pay period end date of 1 April 2013 or later.

 

 

NOTE - ESCT is calculated on the whole dollar amount only. This means the ESCT amount calculated may sometimes look a little lower than the ESCT percentage.

Here is an example direct from the IRD - found on page 8 of "Weekly and fortnightly PAYE deduction tables 2014 IR340":

ESCT is calculated on the whole dollar and is deducted from the gross employer contribution.

Example:
Employee has gross earnings of $408.00 and an ESCT rate of 17.5%
Gross employer contribution (3%) $12.24
ESCT is applied to the whole dollar (ie, $12.00 in this example)
$12.00 x 17.5% = $2.10 ESCT
Minus the ESCT from the gross employer contribution
$12.24 - $2.10 = $10.14 Net CEC.

The result of this is that some employees who earn less than a certain amount may have zero ESCT in some pays.

For example, employee earns $30 this week, and has an ESCT rate of 10.5%.

KiwiSaver Employer Contribution is $30 * 3% = $0.90.

Rounding $0.90 down to the nearest dollar gives zero dollars.

The ESCT is then $0 * 10.5% = $0.

 

For an employee who earns a lower amount in some weeks, this can end up looking as if they are not paying the correct ESCT rate - but they are paying the correct amount.

 

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Finding the ESCT on the IR345

 

Information about ESCT and the IR345 and IR348 can be found here.