We know this is a very stressful time and that everyone will want to act as quickly as possible.
The wage subsidy is designed to support businesses that are faced with laying off staff or reducing hours due to the impact of COVID.
What do we need to know about applying for the Wage Subsidy?
It is based on a trust system; if you apply you will get it! So make sure you have checked you qualify before submitting the application.
How to apply for the COVID-19 Wage Subsidy August 2021 – Work and Income
You will need consent from your employees to apply. If you would like a template for this, please let us know.
Can Legacy apply on my behalf?
No, unfortunately we cannot, you need to make the declaration yourself.
Where can I find my NZBN number?
If you are a company you will automatically have one of these, and you can find by going to: https://companies-register.companiesoffice.govt.nz/ and searching for your company name. Your NZBN is a 13-digit number you can copy and paste.
What if I don’t have a NZBN number and one is required?
You’ll need to apply for one here: https://www.nzbn.govt.nz – we are unsure how long this will take. You need a RealMe login, something we can do on your behalf, so please contact us.
How much will I get?
The Wage Subsidy August 2021 will cover a two-week period at the rate of $600 a week for each full-time employee retained (20 hours a week or more), and $359 a week for each part-time employee retained (fewer than 20 hours a week).
I’m a shareholder employee, do I apply for myself?
You do qualify as an employee of your company.
Do I pay tax or GST on the subsidy I receive as an employer?
Simple answer is no, it will be exempt from GST and is classified as excluded income, however the wages you pay out to the employees are not a deductible expense.
Does an employee need to pay tax on a wage subsidy payment?
Yes, it is paid as their normal wages so is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.
I’m self-employed, do I have to pay tax if I receive a leave payment because I’m in isolation?
Yes, it will be treated as income for tax purposes, so please ensure you keep aside the tax portions that will wash out with your end of year tax return.
What does 40% decline in revenue mean for my application?
It means your business has experienced a 40% decline in actual revenue or predicted revenue for the period 17 August 2021 and 30 August 2021 inclusive when compared with a typical 14-day consecutive period of revenue in the six weeks immediately before the move to Alert Level 4 on 17 August AND the decline is related to COVID-19.
If your business has highly seasonal revenue, you must have at least 40% decline over the revenue test period compared with the same 14 consecutive days in 2020 or 2019 (this is the seasonal comparator period), provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature.
What am I required to do with paying staff?
As an employer you must make best endeavors to retain the named employees in your application and pay them a minimum of 80% of their normal wages/salary for the duration of the subsidy period, which is two weeks. This is normal pay, not sick or annual leave.
If even after making your best endeavors to pay your staff 80% you can’t, at a minimum you must pay your employees the wage subsidy you have received.
If you are discussing topping up to the 100% with annual or sick leave then you need to do this separately and consult with your employment agreements.
For some employees, you may want to consider if applying for the wage subsidy is a good idea. Once you have applied for that person, the obligation is on you to pay them. If this is an area that you are concerned about, please call us.
I have tax coming up – what happens if I’m unable to pay this?
IRD will be providing some relief. The messaging we are receiving from IRD is “if your business is unable to pay its taxes on time due to the impact of COVID-19, we understand you don’t need to contact us right now”.
We do have some options for utilising Tax Traders to push out the upcoming 28 August provisional tax. When you receive your tax notice, please contact us and we can arrange this.
How does this all relate to me specifically, what is my checklist?
Sole Traders / Contractors / Partnerships
- Completed the Sole Trader Subsidy Application
- Ensure that when I receive my subsidy I’m aware there will be tax owing on this.
- Checked that I fit under the criteria for applying for the subsidy by:
- I am a registered business (have a NZBN number)
- My employees are legally working in New Zealand
- The business has experienced a minimum 40% decline in actual or predicted revenue over the period of a month when compared with same month last year AND the decline is related to COVID-19
- I have taken active steps to mitigate the impact of COVID-19
- I am making best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period of two weeks.
- Obtained consent from my employees to apply for the subsidy.
- Included myself as a shareholder in my application.
- Applied for the wage subsidy online (79 or fewer employees including shareholder employees).
- Applied for the wage subsidy online (80 or more employees including shareholder employees).
COVID-19 Wage Subsidy August 2021 for large employers – Work and Income
- Understand that I must make best endeavours to retain the named employees in your application and pay them a minimum of 80% of their normal wages/salary for the duration of the subsidy period, not sick or annual, and this is paid through the PAYE system
Disclaimer · General Advice Warning. The information contained on this document is general in nature and does not take into account your personal situation