Superannuation Subsidy
 

Employer Superannuation Contributions (ESC) are subject to Withholding Tax Payments (ESCT). Inland Revenue provide for several options when calculating ESCT

  1. ESCT is deducted from the calculated Subsidy.
  2. The Subsidy is "Grossed Up" to determine ESCT.
  3. A person can elect to have their subsidy treated as salary and taxed at their normal tax rate. Note: This may affect their family assistance, child support and student loans.
  4. At the discretion of the employer, the rate can be based on the person's earnings in the previous tax year.
    EarningsESCT
    less than $16,80012.5%
    $16,800 - $57,60021%
    over $57,600 33%

The first three options can be selected when setting up a deduction for a Superannuation Subsidy, while the final option can be entered on the person's Personal Details page.

ESCT Calculations

Your Payroll Control Report clearly shows the actual calculations used in each payroll. The Personal Tax Summary also clearly show the figures for each person (for a tax year).

  1. ESCT is usually deducted at the rate of 33 cents in the dollar.
  2. The Gross Up Calculation divides the subsidy by 0.67 before calculating ESCT.
  3. When taxing subsidy as salary, PAYE is calculated for the persons pay (excluding subsidy), and then calculated again on their total pay (including subsidy). The difference between these two values is the extra PAYE for ESC.

Superable Earnings

Superable Earnings include these elements:-