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KiwiSaver Salary Sacrifice and Top-Up
Chapters
What’s the difference between salary sacrifice and top-up?
Before you start: Remove any old KiwiSaver salary sacrifice setups
Setting up the deduction
Setting up the matching benefit
Applying the deduction to a contract group
Applying the deduction to an individual employee
Review in pay summary

Setting up KiwiSaver salary sacrifice and top-up in Smartly

KiwiSaver arrangements can differ between employees. Some employees have a KiwiSaver salary sacrifice arrangement, where their total salary package already includes the employer’s contribution. Others may choose to contribute extra on top of their regular KiwiSaver contributions.

Setting up either option in Smartly is straightforward. Follow the steps below to ensure contributions are calculated correctly.

What’s the difference between salary sacrifice and top-up?

pre tax options

Before you start: Remove any old KiwiSaver salary sacrifice setups

If you’ve previously used a KiwiSaver salary sacrifice workaround, please remove it before setting up the new setup. Otherwise, deductions will be double-counted.

See our article on removing old KiwiSaver salary sacrifice setups first.

Setting up the deduction

1. Go to Settings > Payroll Settings

2. Select the Deductions tab

3. Click Add to create a new deduction

4. Enter a clear name in the Description field, for example:

  • KiwiSaver Salary Sacrifice – when the employer’s contribution is included in the employee's wage/salary package
  • KiwiSaver Top-Up – when the employee contributes extra on top of their regular amount

5. Under Deduction Options, tick the boxes that apply:

  • For Salary Sacrifice: Pre-Tax and KiwiSaver Salary Sacrifice
  • For Top-Up: Pre-Tax and KiwiSaver Top-Up

8. Set the Amount Basis to Based on % of Gross Taxable to ensure the deduction calculates correctly

9. Click Save

pre tax

Setting up the matching benefit

Note: You’ll only need to create a benefit for a KiwiSaver Top-Up. For Salary Sacrifice, the KiwiSaver Employer Benefit was automatically created when your site was set up.

1. Go to Settings > Payroll Settings

2. Select the Benefits tab

3. Click Add to create a new benefit

4. Enter a clear name in the Description field, for example: KiwiSaver Top-Up

5. Tick the KiwiSaver Top-Up box

6. Set the Amount Basis to Based on % of Gross Taxable

7. Click Save

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Applying the deduction to a contract group

After creating the deduction and benefit, apply them first to the relevant contract group(s), then to individual employees as needed.

Note: It’s good to check that the standard KiwiSaver Deduction is already activated for all options.

Option 1: KiwiSaver Salary Sacrifice only

  1. Go to Settings > Payroll Settings
  2. Click the Contract Groups tab
  3. Select the relevant group under Description
  4. Under Deductions, tick KiwiSaver Salary Sacrifice
  5. Under Benefits, make sure KiwiSaver Employer is already ticked
  6. Click Save

Note: KiwiSaver Employer benefit is automatically enabled, so no action is needed.

pre tax

Option 2: KiwiSaver Top-Up only

  1. Go to Settings > Payroll Settings
  2. Click the Contract Groups tab
  3. Select the relevant group under Description
  4. Under Deductions, tick KiwiSaver Top-Up
  5. Under Benefits, tick KiwiSaver Top-Up
  6. Click Save
pre tax

Option 3: KiwiSaver Salary Sacrifice + Top-Up

  1. Go to Settings > Payroll Settings
  2. Click the Contract Groups tab
  3. Select the relevant group under Description
  4. Under Deductions, tick KiwiSaver Salary Sacrifice and KiwiSaver Top-Up
  5. Under Benefits, tick KiwiSaver Top-Up and make sure KiwiSaver employer is already ticked
  6. Click Save
pre-tax

Applying the deduction to an individual employee

Note: The employee must be opted into KiwiSaver in Smartly. If they aren’t, go to Bank and Tax to enable them.

1. Go to People and select the employee

2. Open the Payments tab

3. Under Deductions, tick the boxes that apply:

  • For Salary Sacrifice: tick KiwiSaver Salary Sacrifice and enter the rate (must match the KiwiSaver employer contribution under the Benefits tab, e.g., 3%)
  • For Top-Up: tick KiwiSaver Top-up and enter the employee’s chosen extra rate (must match the Top-Up under the Benefits tab, e.g., 5%)

4. Under Benefits, tick the boxes that apply:

  • For Salary Sacrifice: make sure KiwiSaver Employer is already ticked and matches the Salary Sacrifice deduction rate e.g. 3%
  • For Top-Up: tick KiwiSaver Top-Up and ensure it matches the Top-Up Deduction rate e.g. 5%

5. Click Save

Review in pay summary

Once enabled, Smartly will calculate contributions in this order:

  • Total earnings
  • Minus pre-tax deductions (such as Salary Sacrifice or Top-Up)
  • Apply standard KiwiSaver contributions

Smartly will then send the correct amounts to IRD.

These details will be reflected in the employee’s pay packet.

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