Tax for returning Kiwis
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The Government has released updated information since this article was published. Please refer to our latest article here for more information.
With the government’s announcement that Level 2 and 3 restrictions will be applicable for at least a week from 6am on 28 February, the wage subsidy has been reactivated. The wage subsidy is available nationwide, and in addition, all businesses have access to the resurgence support payment (refer our earlier article here).
The payment remains unchanged ($585.80 per week for each full time worker and $350 per week for each part time worker). Other key criteria are:
The payment will be made each fortnight the Level 3 restrictions last. The wage subsidy will be rounded up to the nearest fortnight.
Applications will be available through the Work and Income website and are anticipated to be open later today. You can provide your e-mail address through the website now (link here) and be informed when applications are open. As the Minister of Finance mentioned the wage subsidy in a press conference over the weekend, we anticipate that applications will be possible based on an anticipated downturn in revenue.
Care must be taken if your business wishes to reduce the wages/salaries of employees during the lockdown period, including engaging in consultation with employees and obtaining their consent to any wage/salary reductions. Baker Tilly Staples Rodway have a team of HR specialists who can assist with any HR queries.
A reminder that Inland Revenue previously issued a determination in relation to payments made to employees for working from home costs. This determination was set to expire on 17 March 2021, but has now been extended to 30 September 2021.
This determination allows employers to make the following tax free payments to employees:
No documentary evidence is required where these payments are made. Additional reimbursing payments can be made to employees in relation to telecommunication usage plans and furniture and equipment costs, but there will need to be evidence that the cost was incurred in relation to the employee’s job.
Inland Revenue are also in the process of considering a more permanent approach given the increased likelihood employees will be working from home once the current pandemic is over.
For most applicants, the wage subsidy is familiar territory. Note, eligible businesses can apply for both the wage subsidy and the resurgence support payment.
Note the change in comparison periods for the wage subsidy. Documents evidencing the decline in revenue should be kept.
The continuation of the working from home costs determination is also an excellent, pragmatic approach by Inland Revenue.
Your Baker Tilly Staples Rodway advisor can assist with the review of calculations or answer any queries you may have.
The Minister of Finance has confirmed the Resurgence Support Payment will be available for businesses impacted by the change in alert levels from 28 February and this will be separate to the Resurgence Support Payment available for businesses impacted by the change in alert levels from 14 to 21 February.
This means two lots of Resurgence Support Payments will be available to applicable businesses. Applications for the second Resurgence Support Payment will be available from 8 March.
An earlier version of this article referred to a 30% revenue drop. The wage subsidy has been confirmed as requiring a 40% drop.
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