Understanding the exemption
SmoothPay correctly implements the KiwiSaver exemption for accommodation provided as an employee benefit.
What qualifies for exemption
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. Which is how SmoothPay works with accommodation allowances.
Why you may receive letters from IRD
IRD may send letters advising that insufficient KiwiSaver contributions have been calculated. This happens because:
IRD's payday filing system does not capture gross taxable amounts exempt from Kiwisaver calculations
myIR has no options or fields for employers to indicate when exempt accommodation benefits are occurring
IRD simply note any discrepancy between gross taxable earnings and Kiwisaver calculations and do not consider exempt amounts
If you receive a letter from IRD about KiwiSaver calculations and you're providing exempt accommodation benefits:
Contact IRD directly to inform them about the exempt accommodation allowance
Request they set a flag on your employer record to prevent future warning letters
Keep documentation of your accommodation arrangements for your records
Implementation in SmoothPay
SmoothPay handles these exemptions correctly by:
Excluding accommodation benefit values from KiwiSaver gross pay calculations
Applying the exemption to both employee deductions and employer contributions
Maintaining compliance with IRD requirements for exempt benefits
Need More Information?
For detailed guidance on what constitutes gross pay for KiwiSaver purposes, visit: IRD's KiwiSaver Gross Pay Guidelines