Summary

When an employee opts out of KiwiSaver, their employer can refund the employee any KiwiSaver contributions not yet reported or paid to Inland Revenue or allow Inland Revenue to refund the employee.

If the employer decides to refund the employee, then they must reverse the employee's KiwiSaver transactions for the refund period.

Important: Employers must not refund employees for KiwiSaver contributions in pay sequences that they have already reported to Inland Revenue through the IR345 or EMS (IR348) reports.

You can use a Manual pay to reverse KiwiSaver transactions that have an ESCT value by manually editing the PAYE amount value on the transaction form.

The Tax overrides tab | PAYE amount field is enabled only when:

• Details tab | Transaction total is less than or equal to zero
• Details tab | Recalculate = "No"
• Tax overrides tab | Override type = "S. ESCT".

  Further Reading: See the New Zealand Superannuation and Salary Sacrifice manual on the website.

Example

In this example, an employee was in the KIWISAVER superannuation fund and she made the following contributions:

• 4% employee contribution
• 5% employer contribution through salary sacrifice.

The employee opted out of KiwiSaver so you need to reverse her KiwiSaver transactions in a closed pay sequence that you have not reported to Inland Revenue yet.

Note: Reverse only Z-type allowances and U-type deductions for KiwiSaver because only these types of transactions affect the employee's KiwiSaver accumulators.

The following topics explain how to reverse the employee's KiwiSaver transactions with ESCT.