KEY POINTS:
- Employee KiwiSaver contributions are not taxed directly, but come out of an employee’s gross salary, on which income tax is paid.
- Employers pay Employer Superannuation Contribution Tax (ESCT) on their KiwiSaver contributions, rates range from 10.5% to 39%.
- All KiwiSaver members pay tax on their investments’ earnings, rates range from 10.5% to 28%.
- KiwiSaver withdrawals are not taxed.
Is KiwiSaver taxed?
The answer to this question, to use Kiwi vernacular is yeah … nah. Some KiwiSaver contributions are taxed, and so are investment returns. But KiwiSaver withdrawals are not taxed.
Tax on KiwiSaver contributions
As a KiwiSaver member you can choose to contribute either 3%, 4%, 6%, 8% or 10% of your before-tax pay. These payments are not taxed directly. But you still pay tax on your entire salary.
For example, if your pre-tax salary is $1000 per week, and your chosen KiwiSaver contribution rate is 10% ($100) you will still pay income tax on the full $1000, not $900.
However your employer has to pay Employer Superannuation Contribution Tax (ESCT) on their additional contributions, which are at least 3% of your salary.
ESCT rates range from 10.5% to 39%, depending on an employee’s earnings:
| Employee annual income | ESCT Rates |
| $0 – $18,720 | 10.5% |
| $18,721 – $64,200 | 17.5% |
| $64,201 – $93,720 | 30% |
| $93,721 – $216,000 | 33% |
| $216,000+ | 39% |
Tax on KiwiSaver returns
How much your KiwiSaver is taxed depends on what kind of scheme you are in. There are two types of KiwiSaver scheme:
- Widely-held superannuation schemes
- Portfolio investment entities (PIEs)
Widely-held superannuation funds are taxed at a flat rate of 28%. However, most KiwiSaver schemes are PIEs. The tax rates on PIEs are called Prescribed Investor Rates (PIRs), which are lower than income tax rates.
The table below shows your PIR – the amount of tax you’ll pay on your KiwiSaver returns – depending on your income:
| Annual Income |
Income Tax Rate |
PIR |
| $15,601-$53,500 | 17.5% | 10.5% |
| $53,501-$78,100 | 30% | 17.5% |
| $78,101-$180,000 | 33% | 28% |
| $180,000+ | 39% | 28% |
You can work out your PIR here.
Tax on KiwiSaver withdrawals
The good news is that KiwiSaver withdrawals are not taxed.
Compare KiwiSaver Providers with Canstar
If you’re comparing KiwiSaver funds, the comparison table below displays some of the products currently available on Canstar’s database for a KiwiSaver member with a balance of $20,000 in a Growth fund, sorted by past 5-year return (highest to lowest), followed by company name (alphabetical) – some may have links to providers’ websites. Use Canstar’s KiwiSaver comparison selector to view a wider range of KiwiSaver funds. Canstar may earn a fee for referrals.
To read more about our latest KiwiSaver Awards click this link or to compare KiwiSaver providers, click on the button below.
Compare KiwiSaver providers for free with Canstar!
About the author of this page
Bruce Pitchers is Canstar NZ’s Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the Driven, Stuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines and newspapers, including Woman’s Day and New Idea. He is also the co-author of the murder-mystery book 5 Minute Murder.
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