THE WAGE SUBSIDY
The Government is asking for businesses to try and keep employees in employment while we get through these times and to try your best at paying your staff a minimum of 80% of their regular wage. If that isn't possible, you need to pay at least the subsidy rate (ie, full-time or part-time). You will not make any changes to your obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employee. If your employee's usual wages are less than the subsidy, you must pay them their usual wages. Any difference should be used for the wages of other affected staff - the wage subsidy is designed to keep your employees connected to you. You can get the subsidy for your casual employees for their usual hours, and you must continue to employ them for the subsidy period. Applications for the Wage Subsidy Scheme will open nationally from 9am today Friday 20 August 2021, with applications initially open for two weeks. You’ll be able to apply on the Work and Income website.
The Wage Subsidy will be available to eligible businesses, organisations and the self-employed impacted by the move to Alert Level 4 on 17 August 2021.
To reflect higher wage costs since the scheme was first used in March 2020 the payments have been increased to:
$600 per week per full-time employee
$359 per week per part-time employee.
Wage subsidies should be passed onto the employee and processed as part of the employee's normal wages. All deductions (such as PAYE, KiwiSaver and child support) should be made as normal. Remember this is a subsidy to help you meet the 80% minimum, so a top-up may be required which could be through cash payments or annual leave but ensure this is arranged with your employees. This also does not limit you to paying more than 80% of a regular wage if you see appropriate.
THE TAX TREATMENT FOR EMPLOYERS
1. Tax treatment on the wage subsidy received
As an employer, the lump sum wage subsidy payment received for employees will be treated as non-taxable income.
This subsidy is also exempt from GST.
2. Employee tax on the weekly wage payments
This is processed like normal wages so it will require normal deductions such as PAYE, Kiwisaver and child support.
There is no tax deduction for the employer on this portion of wages that is paid out using the subsidy, only on any top-up portion you contribute yourself.
3. Tax treatment of the Leave Payment
This is treated exactly the same as the wage subsidy above.
BUT I AM SELF EMPLOYED?
If you are self-employed you can also apply for the wage subsidy however the tax treatment is different. The subsidy payment received will be treated as income for tax purposes as it is a payment to replace the loss of earnings at this time.
DON'T CLEARLY FIT IN THOSE BOXES?
Shareholders: You can apply for the subsidy if you work in the business and are paid a wage or salary or draw an income for the work you do in the business. Add your details in the Employee form as well. Partnerships: If each partner that works for the business is paid a wage or salary or draws an income for the work they do can apply. One partner to apply in the Employee form on behalf of the other partners and list the partners as employees. Contractors: You are entitled to apply for the wage subsidy under the self-employed application.
RESURGENCE SUPPORT PAYMENT
If your business or organisation is facing a reduction in revenue due to the alert level increase announced on 17 August, you may be eligible for the RSP.
Applications will open at 8am on 24 August. To qualify, your business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level.
Eligible businesses and organisations can apply to receive the lesser of:
$1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs
four times (4x) the actual revenue decline experienced by the applicant.
If you have previously applied for the RSP due to a prior alert level change, you are able to apply again, as long as you meet the eligibility criteria. Previously you could not apply for a Resurgence Support Payment if you are already getting another COVID related payment, such as the wage subsidy for an employee. We would expect this will also be the case again so please determine which support suits you best as the timing does not allow for both.
You will need to supply the following information on your application:
New Zealand Business Number (NZBN)
If you’re self-employed, a sole trader, a partnership or a trust, and you don’t already have an NZBN - apply for yours on the NZBN website. There’s no charge for this service.
If you’ve filed an Employment Information (EI) in the last 30 days leading up to the application, your employees’ name and IRD number will already be on the application. Otherwise, you’ll need to enter each employee's name, IRD number, and whether they are a full or part-time employee.
This must be a New Zealand bank account.
You'll need to provide revenue details for the 7-day elevated alert level period and the 7-day comparison period.
How to Apply?
You need to have a myIR account to apply for the Resurgence Support Payment. If you don't already have a myIR account, you can create one.
SMALL BUSINESS CASH FLOW LOAN SCHEME
This is available until 31 December 2023 and is available for small businesses, including sole traders and the self-employed, impacted by COVID-19 to support their cash flow needs.
If you've previously applied for this loan and have fully repaid it, you can apply again.
You can apply through myIR.