The New Zealand Government has made a Wage subsidy and Leave Payment available to support employers affected by COVID-19
In this article we cover frequently asked questions.
Tax
If, as an employer I am receiving the wage subsidy on behalf of an employee, do I have to pay GST on the subsidy?No – it will be treated as exempt from GST.
As an employer, do I have to pay tax on the wage subsidy I receive for an employee?
No, you don’t have to pay tax on a wage subsidy as it’s classified as excluded income.
Does an employee need to pay tax on a wage subsidy payment?
Yes, they will as the subsidy is paid to the employer as part of their normal wages. This means it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.
If, as an employer I am receiving the leave payment on behalf of an employee because they are in self-isolation, do I have to pay GST?
No – it will be treated as exempt from GST.
If I’m self-employed do I have to pay tax if I receive a leave payment because I am in self-isolation?
This payment will be treated as income for tax purposes.
If I’m an employee do I need to pay tax if I receive a leave payment because I am in self-isolation?
The leave payment will be paid to your employer, and you will receive it like normal wages. This means it’s subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.
Charities
If I’m an employer of a registered charity, incorporated society, non-government organisation, or post-settlement governance entity am I entitled to apply for the wage subsidy for my employees?Yes, you can apply for the wage subsidy if your business has been adversely affected as a result of COVID-19 and you are struggling to retain your employees.
If I’m an employer of a registered charity, incorporated society, non-government organisation, or post-settlement governance entity am I entitled to apply for the leave payment for my employees?
Yes, you can apply for the leave payment if your employees are required to self-isolate because of Ministry of Health Guidelines and cannot work from home. Employees may not be able to work from home because:
- of the nature of their occupation e.g. tradespeople or you cannot provide employees the ability to work from home e.g. no access to laptops.
- they have been diagnosed with COVID-19
- they are caring for dependents.
Leave Payment
If your employee is diagnosed with COVID-19, do they have to use their accrued sick leave before they are eligible for the COVID-19 leave payment?
Employees do not need to use their sick or annual leave entitlement before you can apply for the COVID-19 leave payment – it can be applied for right away. You can have a conversation with your employee about whether they would prefer to use any accrued sick or annual leave first, rather than the COVID-19 leave payment as there may be cases where the employee would receive more through their own sick leave than the COVID-19 payment.
Multiple Applications
I'm an employee who works full time for a company that hasn’t been impacted by COVID-19, and I’m also self-employed. Can I apply for the wage subsidy using the self-employed application?
Yes. You can apply under the self-employed application, as long as you meet the usual criteria for your impacted business. We pay employers and self-employed contractors, not individuals. However, if you are only part-time self-employed, then your application should be at the part-time rate.
I’m an employee who works full-time for a company that has been impacted by COVID-19, and my employer has applied for the wage subsidy on my behalf. I’m also self-employed. Can I also apply for the wage subsidy using the self-employed application?
Yes. You can apply for the subsidy under the self-employed application, as long as you meet the usual criteria, despite being a named employee on your employer's application. However, if you are only part-time self-employed, then your application should be at the part-time rate.
I work multiple part-time jobs. Can I get wage subsidy from all of my different employers?
Yes. As an employee who is employed by two or more different businesses, you can receive the wage subsidy from multiple employers, as long as you meet the usual criteria. We cannot pay the same employer more than once for the same employee, and the wage subsidy rate should reflect whether you're employed part-time or full-time by that employer.
Shareholders
If I am a shareholder in a business, can I apply for the wage subsidy?
If you work for the business and you are paid a wage, salary or draw an income for the work you do for the business, you can apply for the wage subsidy.
If I work for a business where there are multiple shareholders, how do I apply for the wage subsidy?
The business you work for should make one application for all of its employees and shareholders who work for the business and are paid a wage, salary or draw an income for that work they do.
Which form do I use?
You can use the ‘employer’ form and the other shareholders if they are paid a wage, salary or draw an income for the work they do for the business, need to have their details entered into the employee section of the form.
Partnerships
If my business operates in a partnership, can I apply for the wage subsidy?
If each partner that works for the business is paid a wage, salary or draws an income for the work they do, you can apply for the wage subsidy.
Which form do I use?
One partner must apply on behalf of the other partner(s) using the ‘employer’ form and using the other partners as named employees.
Contractors
If I am a contractor, am I entitled to apply for the wage subsidy?
Yes. Contractors can apply for the wage subsidy using the ‘self-employed’ application, provided you meet the criteria.
Please reach out to our team by email, website, Zoom video, social messaging or phone us on +64 9 520 9200. Many of you already deal with us exclusively via these methods and will experience no service change. We are very experienced in working remotely and welcome any enquiries you may have.
Read more at https://www.workandincome.govt.nz/