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COVID-19 wage and leave package update | Tax Talk

In the last few days, the government has updated their relief package and further clarity has been provided around some common questions.

Wage and leave update

The key changes are:

  1. The initial $150,000 cap was removed and so large businesses are now eligible provided they meet the other criteria (30% reduction in revenue, make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period and discussion with banks)
  2. For businesses with more than 100 employees, they can upload a spreadsheet instead of needing to individually detail each employee

 

The further points clarified are:

  1. The wage subsidy is not subject to GST (employers and self-employed people do not need to include the subsidy as a GST output when received)
  2. The subsidy is taxable income to the employees – therefore PAYE, KiwiSaver and similar amounts need to withheld as usual
  3. The subsidy is not taxable income to an employer or tax deductible when on-paid to employees. Therefore tax adjustments will be required for the 31 March year end.
  4. The subsidy is taxable income to a self-employed person.

The government has also indicated further changes may be made to the wage subsidy in coming days. For information on the subsidy please stay up to date with our COVID-19 news hub.

Subsequent to publishing this article, further clarification has been provided by government, specifically:

  • The leave package has ceased to be available from 3pm on 27 March 2020. The wage subsidy continues to be available.
  • The government expects the wage subsidy to be passed on to workers at a minimum, but best endeavours must still be made to meet 80% of their ordinary wage. The ordinary wages or salary are as specified in their employment agreement at 26 March 2020
  • Employers must now commit to retaining the employee for the twelve weeks of the subsidy period

DISCLAIMER: Our team is dedicated to helping you continue with business as usual, as much as you can. Information on government help is changing constantly and within hours of articles being added, the specifics may be out of date or only partially accurate. While we endeavour to keep this website accurate and current, our top priority is providing our clients with dedicated and relevant personal advice. If you need specific and up-to-date information, please seek help from your usual advisor directly.

No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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