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Report: ESCT Rate Checking Report
- Silas Stratford
Introduction
For Pay Runs that direct credit from 1 April 2023, a new standard report has been introduced to assist you with payroll processing, and ensuring your employees are set with the correct ESCT rate in Datapay.
This report is intended to be included in your Authorisation distribution. If you’re unsure how to do this, please see the guide here.
ESCT Rates
Employer Superannuation Contribution Tax (ESCT) is a tax paid on employer contributions made to superannuation funds on behalf of employees in New Zealand. Employer contributions are typically made to KiwiSaver funds but can also be to other complying superannuation funds.
As an employer, you have a responsibility to select or verify the rate of ESCT for each employee when they start with you, and again at the start of each tax year (1 April). In Datapay, you have the option to manually select an ESCT Rate, or use the System Generated option. If the System Generated option is used, Datapay assists you by evaluating an ESCT Rate based on the information it has available. The rate is estimated depending on how much an employee earns and how long they’ve worked for you. The ESCT Rate Checking Report is designed to assist you understand how the ESCT Rate is being set and to allow you to verify the ESCT rates more efficiently.
Datapay can only evaluate an ESCT rate based on the information available. As such, it is important to confirm the rate generated is correct.
Key Report Info
The key pieces of information this report will give you are the:
ESCT Rate Selected: This could have been manually entered, or determined by Datapay
ESCT Rate Threshold Amount: This is the value used to determine the ESCT Rate if the System Generated option is used.
ESCT Rate Selection Criteria: See below for more information on what this information means.
ESCT Rate Selection Criteria | What does this mean? |
|---|---|
Prior year earnings | This is the first pay packet after 1 April for an employee who was first paid PRIOR to the previous 1 April. The "ESCT Rate Option" is System Generated so Datapay has used the prior year’s earnings to generate the ESCT Rate Threshold Amount. |
System estimated earnings | This is the first pay packet after 1 April for an employee who was first paid AFTER the previous 1 April (this could also be their first pay packet ever). The "ESCT Rate Option" is System Generated so Datapay has generated an estimate of the employee’s earnings for this year. |
Manually Entered ESCT Rate Threshold Amount | "Manual ESCT Rate Threshold Amount" has been entered to override what has been calculated by Datapay. |
Manually Entered ESCT Rate - Prior year earnings is not used | The ESCT Rate has been manually set for the employee. If this was set in a previous year, is it still valid? |
If the System Generated option is used instead, Datapay would use the Prior year earnings to determine the ESCT Rate. | |
Manually Entered ESCT Rate - System estimated earnings is not used | The ESCT Rate has been manually set for the employee. If this was set in a previous year, is it still valid? |
If the System Generated option is used instead, Datapay would use the System estimated earnings to determine the ESCT Rate. | |
Manually Entered ESCT Rate - Manually Entered ESCT Rate Threshold Amount is not used | The ESCT Rate has been manually set for the employee. If this was set in a previous year, is it still valid? |
A Manual ESCT Rate Threshold Amount has also been entered, but this would only be used if the ESCT Rate was set to System Generated. |
Actions Required
Review the report when it is generated to determine if you need to make any changes.
Pay particular attention when the ESCT Rate Selection Criteria is
System Estimated Earnings (as you may be able to make a better prediction of what you expect an employee’s earnings to be this year)
or if the ESCT Rate has been manually entered (as this may be out of date).
Ideally, it is best to review the ESCT Rates even if the employee doesn’t currently have superannuation contributions, as they may opt in in future. You do not need to update the ESCT Rate to 0% for these employees.
Example Report
Related Articles
ESCT Rates - Information on how ESCT rates are calculated in Datapay
Adding Report Users and Assigning Reports for Distributions - Instructions on how to add this new report to your Authorisation distribution.
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