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Govt. Wage subsidy

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    Posted: 26 Mar 2020 at 12:29pm
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Quick question. Our flatmates boss has applied for the wage subsidy for his staff. Has the payment already been taxed or is the employer required to take out PAYE?
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Post Options Post Options   Likes (1) Likes(1)   Quote SaltyC Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 12:39pm
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PAYE must be taken out when paid out to an employee
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Post Options Post Options   Likes (0) Likes(0)   Quote Legacy Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 12:39pm
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I’m self employed and just got the $7k CoVid subsidy .
I asked my accountant about tax etc and was told there is no tax or gst to be paid on this money.
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Post Options Post Options   Likes (0) Likes(0)   Quote SaltyC Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 12:42pm
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From IRD website:

Wage subsidies and self-isolation leave subsidies should be passed on to the employee by the employer and processed as part of the employee’s normal wages. All deductions of PAYE, Kiwisaver, Student Loans, child support etc are made as normal.

If the total wage (subsidy + employer funded pay) amounts to the same wages as previously, the pay and deductions on their payslip should be the same. Whether employers top up the subsidy with cash payments or annual leave is up to them to arrange with staff.

The employer will not be liable for income tax or GST on the subsidy received from MSD and will not be entitled to an income tax deduction for wages paid out of the wage subsidy.

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Post Options Post Options   Likes (0) Likes(0)   Quote MarkE Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 1:01pm
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Cheers guys, i figured the employer would most likely tax the payout.
Ive also recieved the 7k payout as a self employed trader, would have thought id be paying tax on that?
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Post Options Post Options   Likes (0) Likes(0)   Quote pjc Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 1:24pm
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76 new cases overnight,total now 230
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Post Options Post Options   Likes (0) Likes(0)   Quote Garry 23041 Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 1:27pm
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Would just go onto your income and if you owe tax at year end I would guess...
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Post Options Post Options   Likes (0) Likes(0)   Quote Legacy Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 2:23pm
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Originally posted by Legacy Legacy wrote:

I’m self employed and just got the $7k CoVid subsidy .
I asked my accountant about tax etc and was told there is no tax or gst to be paid on this money.


Sorry I don’t think I was quite right there .
I’ve entered it as “other income “ on myob and zero GST rated .
It’s a wage subsidy so it does go into the total income .
Anyway I’ve put $1750 aside as a tax component of the $7k
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Post Options Post Options   Likes (0) Likes(0)   Quote fish-feeder Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 2:53pm
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Originally posted by pjc pjc wrote:

76 new cases overnight,total now 230

283 I think it is now
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Post Options Post Options   Likes (0) Likes(0)   Quote Kevin.S Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 3:10pm
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How do you get the $7k self employed subsidy?  I thought it was $580 a week for self employed, or do they pay it as a lump sum?
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Originally posted by fish-feeder fish-feeder wrote:

Originally posted by pjc pjc wrote:

76 new cases overnight,total now 230

283 I think it is now

C;mon Gents we have a CV19 thread, why contaminate this one with non topic stats, stick to the subject...as you were! Ouch

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Post Options Post Options   Likes (0) Likes(0)   Quote SaltyC Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 3:31pm
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Yes Kevin, it is paid as a lump sum to all who qualify and claim it
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Originally posted by SaltyC SaltyC wrote:

Yes Kevin, it is paid as a lump sum to all who qualify and claim it

Thanks, was a bit vague on the form I filled in.  I suppose that is far easier to administer than paying it weekly.
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Post Options Post Options   Likes (0) Likes(0)   Quote SaltyC Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 3:39pm
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That's right Legacy, it is  taxable in the hands of the end recipient. If you are a business and you receive it it is not income and the payment to your employee is not deductible to you. ie it has a net zero effect on the business but is taxed in the employees hands as their normal wages that it replaces would be.

If you receive it as a sole trader and are not paying it on to an employee it is taxable in your hands.
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Post Options Post Options   Likes (0) Likes(0)   Quote Sufishent Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 4:09pm
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Originally posted by Legacy Legacy wrote:

I’m self employed and just got the $7k CoVid subsidy .
I asked my accountant about tax etc and was told there is no tax or gst to be paid on this money.

What form did you fill in?
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Post Options Post Options   Likes (0) Likes(0)   Quote Legacy Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 5:14pm
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In this order -

Winz
CoVid 19 employer support
Wage subsidy
Apply for wage subsidy or leave payment
Scroll down to “self employed (no employees) application
And then you’re at the “self employed application “
It’s a simple one page form, hope that helps
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Post Options Post Options   Likes (0) Likes(0)   Quote Sufishent Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 5:22pm
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Cheers
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Post Options Post Options   Likes (0) Likes(0)   Quote wayno Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 5:39pm
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My understanding is that the lump sum covers 12 weeks. If the lockdown ends after say, 6 weeks would those who claimed and were paid out be liable to return the "unused" portion?

From my sums the $585/week equates to 83% of my normal wages (24hrs/week) so will cost employer $0, but for the 40hr/week staff the company will have to stump up around $400/week to maintain the required 80%.
Time will tell how many businesses will survive, even with assistance from their banks.

My job comes under the "essential" category, not sure what will/should happen regarding being paid for attending a call-out given the government is effectively paying me to stay home, and any call-out would be earning income for the company.
Many questions in these unchartered times....

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Post Options Post Options   Likes (0) Likes(0)   Quote Steps Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 6:20pm
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Information in this thread has been very helpful
 Thankyou all.
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Post Options Post Options   Likes (0) Likes(0)   Quote Keith C Quote  Post ReplyReply Direct Link To This Post Posted: 26 Mar 2020 at 7:37pm
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Originally posted by wayno wayno wrote:

My understanding is that the lump sum covers 12 weeks. If the lockdown ends after say, 6 weeks would those who claimed and were paid out be liable to return the "unused" portion?



The wage subsidy is unrelated to the lockdown, but for the financial implications of Covid.

It, and the leave subsidy, were put into place before the Covid Alert levels were even announced.
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