• The Employer Tax Credit ceases on 31st March 2009.

• The Employer Tax Credit is a monthly amount claimable by employers to offset their contributions to employee KiwiSaver schemes.

• The maximum monthly amount is based on $20 a week per employee, and changes based on the number of days in each month.

• The tax credit is the employer contributions for the month, up to the monthly maximum.

• The tax credit cannot be claimed for employees under 18 years old. This is automatically handled by Ace Payroll provided the employee birth date has been entered.

From 1 April 2008, you can claim a tax credit of up to $20 per employee per week if you contribute to their KiwiSaver schemes or complying funds. All contributing employers are entitled to claim a tax credit, including charities and other non-profit organisations.

The purpose of the employer tax credit is to help reimburse you for the cost of making contributions to your employees' KiwiSaver scheme or complying fund. You cannot claim for contributions to other superannuation schemes such as defined benefit schemes.

To qualify for the employer tax credit:

You must be carrying on business from a fixed establishment within New Zealand or be a non-resident employer who chooses to make KiwiSaver deductions and contributions for PAYE resident employees. The employer must be:

• resident, or

• if non-resident, carrying on a business from a fixed establishment, or

• if non-resident and not carrying on a business from a fixed establishment, an employer who chooses to make KiwiSaver deductions and contributions for employees.

The employer contribution must be made to a KiwiSaver scheme or a complying fund.

The employee receiving the contribution must be 18 or over, and be less than the age of eligibility to withdraw from their KiwiSaver scheme.

Your contributions must be employers' superannuation contributions.

Private domestic workers who choose to make employer contributions may claim employer tax credits.

You will need to determine eligibility and claim as appropriate.

Provided you make an employer contribution in the payment period, you can claim the lesser of:

• the actual employer contributions for the employee in the PAYE period, or

• the maximum ETC claim of $20.00 x the number of weeks paid in a PAYE period.

The maximum monthly ETC claim is calculated as:

$20.00 x number of days in a month / 7

which means:

• $80.00 for a 28 day month ($20 x 28 divided by 7), and

• $82.86 for a 29 day month ($20 x 29 divided by 7), and

• $85.71 for a 30 day month ($20 x 30 divided by 7), and

• $88.57 for a 31 day month ($20 x 31 divided by 7).

Section KJ 7 Employer requirements

(a) pays an amount of employer contribution, and the employee is

(i) aged 18 or over; and

(ii) is not entitled to withdraw an amount from a fund or scheme under schedule 1, clause 4(3) (which relates to lock-in of funds) of the KiwiSaver scheme rules in the KiwiSaver Act 2006 or a rule the same as that clause; and

(b) claims the amount of their entitlement to a tax credit under this subpart for an employee, in an employer monthly schedule or remittance certificate they furnish, unless they meet a requirement in paragraph (c); and

(c) if paragraph (b) does not apply,

(i) has an amount of compulsory employer contribution unpaid, specified in a notice under section 101I(5) of the KiwiSaver Act 2006; or

(ii) has an amount of short payment under Part 3, subpart 3 of that Act.

(d) meets 1 of the requirements in section 6(2) of that Act.

Section KJ 8 Tax credit amount

(1) For the PAYE period, the amount of the tax credit is equal to the lesser of

(a) the employer contributions for the employee, to the extent to which the employee meets the requirements of section KJ 7(a) for the period; and

(b) the amount calculated using the following formula:

$20 × weeks in PAYE period.

(2) In the formula, weeks in PAYE period is the number of weeks (with fractions of a week expressed as a decimal) in the PAYE period that the employee meets the requirements of section KJ 7(a), including weeks in the PAYE period that the employer does not pay an amount of employer contribution.