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KiwiSaver Salary Sacrifice
Other KiwiSaver Sections
  Overview   Opting Out   Contributions Report   Common Questions
  Employee Setup   Opting In   Reversals and Refunds   2009 Changes
  Pay Calculation   Contributions Holiday   Company Setup   2008 Changes
  Automatic Enrolment   Employer Contributions   Scheme Providers  
  Exempt Employees   Employer Tax Credit   Salary Sacrifice  
  Contribution Rates   Employee Tax Credit   Exempt Schemes  
Download IRD KiwiSaver Forms (PDF)
  KS1 KiwiSaver Employee Details   KS3 KiwiSaver Employer Guide   KS6 Contributions Holiday   KS11 Intro Leaflet
  KS2 KiwiSaver Employee Deductions   KS4 Employer Guide   KS10 Opt-Out Form  

  • Salary Sacrifice is a mechanism whereby an employee can benefit from the tax free status of an employers KiwiSaver contribution, at no cost to the employer.

  • This is done by automatically reducing the employee's salary by the amount of the employer contribution.



If the employee is salaried there is an additional option in the KiwiSaver section of the Employee Maintenance screen.



Once activated, note the result of this on the employee pay calculation screen in the example below.

Whilst the employee salary of $52,000 a year is still shown as $1,000 weekly gross the taxable gross is reduced to $980.40

This means the employer's contribution of $19.60 is the amount of salary being sacrificed by the employee per week and is not taxed.

I have set up an employee on salary sacrifice, and have now paid them a small bonus as an extra emolument. I notice that the employer KiwiSaver contribution has not increased, but the employee contribution has. Why is this?
Salary Sacrifice is a mechanism whereby the employee can make KiwiSaver Contributions at no cost to the employer, by sacrificing some of their salary towards KiwiSaver.

Instead of the employer paying a percentage of gross earnings towards KiwiSaver in addition to the employee's gross earnings, the employee has effectively said "please reduce my salary by a certain percentage, and call it KiwiSaver".

Accordingly no agreement has been made for the employer to pay KiwiSaver in addition to gross earnings, and this is why the employer contribution has not increased.

The employee contribution is based on total gross earnings, and it is because the extra emolument you have paid is included in the employee gross earnings that the employee contribution has increased.

I have a staff member paid on an hourly rate. Can I use the Salary Sacrifice feature for this employee?
No. The Salary Sacrifice feature can only be used for salaried employees.

More KiwiSaver Information

  KiwiSaver Overview   KiwiSaver Employee Tax Credit
  KiwiSaver Employee Setup   KiwiSaver Contributions Report
  KiwiSaver Pay Calculation   KiwiSaver Reversals and Refunds
  KiwiSaver Automatic Enrolment   KiwiSaver Company Setup
  KiwiSaver Exempt Employees   KiwiSaver Scheme Providers
  KiwiSaver Contribution Rates   KiwiSaver Salary Sacrifice
  KiwiSaver Opting Out   KiwiSaver Exempt Schemes
  KiwiSaver Opting In   Frequently Asked Questions
  KiwiSaver Contributions Holiday   KiwiSaver 2009 Changes
  KiwiSaver Employer Contributions   KiwiSaver 2008 Changes
  KiwiSaver Employer Tax Credit   ESCT on Employer Contributions
  Alphabetical Index FAQ Questions FAQ Contents Back to top
Download IRD KiwiSaver Forms (PDF)
  KS1 KiwiSaver Employee Details   KS3 KiwiSaver Employer Guide   KS6 Contributions Holiday   KS11 Intro Leaflet
  KS2 KiwiSaver Employee Deductions   KS4 Employer Guide   KS10 Opt-Out Form  
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