The minimum contribution rate for employers and employees will increase from two percent to three percent of gross salary or wages from the first pay period commencing on or after 1 April 2013.
Employers will need to change the contribution rates for existing KiwiSaver members if the employee’s contribution rate is two percent. If the employee currently contributes at either four percent or eight percent, there is no need to change the contribution rate. The default rate for new employees over the age of 18 years that are automatically enrolled into KiwiSaver has also increased from two percent to three percent of gross salary or wages from the first pay period commencing on or after 1 April 2013.
There are also changes in the employment of primary and secondary school children. As noted in our previous newsletter, the tax credit that covered the tax on their first $2,340 of income from employment was repealed on 1 April 2012, and the entitlement to claim it was withdrawn in May 2012. Employers will now have to deduct PAYE/tax from their wages/schedular payments respectively. As a result, if the employee is a KiwiSaver member, the employer will have to make deductions at three percent. However, if the employee is less than 18 years of age, employers will not need to make employer contributions.
Important: This is not advice. Clients should not act solely based on the material contained in the Client Newsletter. Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
