In PaySauce, you are able to set up an accommodation allowance for your employees that is exempt from KiwiSaver calculations. This is correct for when the accommodation is provided as an employee benefit. It means you will not pay the employer contribution on the value of the accommodation, and the employee's deduction rate will be calculated on base wages/salary only and exclude the accommodation portion.
What qualifies for exemption from KiwiSaver
According to IRD guidelines, the following accommodation related payments are excluded from KiwiSaver gross pay calculations:
The value of providing board, lodging, use of a house or part of a house, or an allowance instead of accommodation
Expenditure or allowances for accommodation and living costs overseas
This means that when calculating KiwiSaver contributions (both employee deductions and employer contributions), you should not include the taxable value of accommodation benefits in the gross pay amount.
Setting up the allowance in PaySauce
Detailed instructions for creating employee payments can be found here: Creating employee payments
To set up an accommodation allowance as being excluded from KiwiSaver, you must ensure that the employee's salary or base pay rate is loaded as the KiwiSaver exclusive value
A separate allowance should be set up as a secondary payment for the fixed dollar amount you need to pay each period, and you should check the box to indicate the value should not be included in KiwiSaver calculations
IRD letters about KiwiSaver
IRD may send letters advising that insufficient KiwiSaver contributions have been calculated. This happens because:
IRD's system cannot see that an exempt accommodation benefit is being provided to the employee
Their employer portal has no field for employers to indicate when exempt accommodation benefits are occurring
The system flags apparent discrepancies between taxable income and KiwiSaver contributions
If you receive a letter from IRD about KiwiSaver calculations and you're providing exempt accommodation benefits, your next step depends on whether or not PaySauce is your PAYE Intermediary.
If PaySauce handles your PAYE
If PaySauce is your PAYE Intermediary - which means we are collecting the PAYE funds for you, paying IRD on your behalf and taking care of your filing requirements - we will manage the IRD contact for you.
Send a copy of the letter to our Support team
We will contact IRD and ask them to update their records to reflect the accommodation payment
They keep a note on your record for 12 months, after which time they may start to reissue letters - simply notify our team again if you receive another letter.
If you manage your own PAYE
If you are paying your PAYE to IRD directly, you will need to contact IRD.
Contact IRD directly to inform them about the exempt accommodation benefit
Request they set a flag on your employer record to prevent future warning letters
Repeat this process when they issue you a new letter (probably in about 12 months time).