How to calculate an employee's ESCT rate. Download as PDF ESCT is the employer superannuation contribution tax deducted from the employer’s contribution to KiwiSaver and registered superannuation schemes for an employee. The ESCT rate is set when an employee first starts employment with the employer and reset each 1 April after that or when the tax laws change. ESCT is paid to the Inland Revenue along with the PAYE deductions and net KiwiSaver contributions on the employer deductions form (IR345). ESCT rates The ESCT rate that applies depends on the employee’s “relevant remuneration”. Relevant remuneration equals the taxable income of the employee plus the employer contributions to KiwiSaver and other superannuation schemes. Only income and the contributions paid by the employer and related employers are included.
To calculate an employee’s ESCT rate An employee’s ESCT rate is set when the employee first starts employment with the employer and is updated each subsequent 1 April unless the legislation changes. At 1 April. New and existing employers (Employers) Independent Contractors. My employer and I can't agree on whether I'm an employee or an independent contractor, and I don't have an employment agreement.
What can I do? If there isn’t a written employment agreement (which is in itself unlawful), there should have been some verbal understanding between you and your employer before you started work. You should make a record of your understanding of the agreement that you thought you had with your employer. This can be a complex area and it is generally advisable to seek legal advice if you have a dispute about whether you are a contractor. If you can’t afford your own lawyer, contact your local Citizens Advice Bureau or Community Law Centre.
In general, there are several factors that can indicate that you are an employee, such as: you and the employer intended to have an employee-employer relationship. The Employment Relations Authority can determine your status if you and the employer cannot come to an agreement about it (see the next question). Back to top. Self-employed resident contractors (Industry guidelines) Industry guidelines: Screen production industry All payments made to you as a contractor make up your gross (total before tax) income. This includes payments received to cover work-related expenses (allowable deductions). You should receive an annual summary of earnings from us showing your gross earnings and tax on schedular payments deducted. How are you taxed? Initially, tax is deducted at a rate of 20% on your gross (total before tax) earnings. This includes all payments you receive as a resident contractor, including per diems and accommodation allowances.
Is this the right level of tax for you? As a resident contractor, you may have expenses during the year that can be deducted against your end-of-year tax (these are called allowable deductions). To change your tax rate, you'll need to apply to us in writing, describing your circumstances. Does tax have to be deducted from the schedular payments you receive? Do you need to file a tax return? Yes. What happens when you have an employee? Taxing lump sum payments (Accounting for allowances and benefits for staff) Accounting for allowances and benefits for staff: Bonuses Lump sum payments include annual or special bonuses, cashed-in annual leave, retiring or redundancy payments, payments for accepting restrictive covenants, exit inducement payments, gratuities, or back pay.
These are also called "extra pays". Overtime or any regular payments are not lump sum payments. Lump sum payments from primary employment Redundancy payments and retiring allowances are not subject to ACC earners' levy. How PAYE (tax plus ACC earners' levy) applies to lump sum payments You can also apply PAYE at 34.45 cents in the dollar when the employee asks you to use this rate. * To calculate the grossed-up annual value of the employee's income: add up the PAYE income payments for the four weeks ending on the date of the extra payment, whether this is the normal pay cycle or not, and multiply by 13.
The amount of the extra pay is not included in this total. How tax (no ACC earners' levy) applies to lump sum payments.