Govt. Wage subsidy
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URL: https://www.fishing.net.nz/forum/forum_posts.asp?TID=133158
Printed Date: 18 Apr 2024 at 9:13pm
Topic: Govt. Wage subsidy
Posted By: MarkE
Subject: Govt. Wage subsidy
Date 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? ------------- Sea Strike 18' Centre Console - Under Construction.... http://www.fishing.net.nz/asp_forums/sea-strike-18-build-thread_topic87723_page1.html" rel="nofollow - Build Thread here |
Replies:
Posted By: SaltyC
Date Posted: 26 Mar 2020 at 12:39pm
| PAYE must be taken out when paid out to an employee |
Posted By: Legacy
Date 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. |
Posted By: SaltyC
Date 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. |
Posted By: MarkE
Date 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? ------------- Sea Strike 18' Centre Console - Under Construction.... http://www.fishing.net.nz/asp_forums/sea-strike-18-build-thread_topic87723_page1.html" rel="nofollow - Build Thread here |
Posted By: pjc
Date Posted: 26 Mar 2020 at 1:24pm
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76 new cases overnight,total now 230
------------- Sex at 58.Lucky I live at 56 |
Posted By: Garry 23041
Date Posted: 26 Mar 2020 at 1:27pm
| Would just go onto your income and if you owe tax at year end I would guess... |
Posted By: Legacy
Date Posted: 26 Mar 2020 at 2:23pm
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 |
Legacy wrote:Posted By: fish-feeder
Date Posted: 26 Mar 2020 at 2:53pm
283 I think it is now ------------- dont get my personality mixed up with my attitude,my personality is me,my attitude depends on you. |
Posted By: Kevin.S
Date Posted: 26 Mar 2020 at 3:10pm
| 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? |
Posted By: Catchelot
Date Posted: 26 Mar 2020 at 3:15pm
C;mon Gents we have a CV19 thread, why contaminate this one with non topic stats, stick to the subject...as you were!  ------------- "The sea, once it casts its spell, holds one in its net of wonder forever." - Jacques Cousteau |
Posted By: SaltyC
Date Posted: 26 Mar 2020 at 3:31pm
| Yes Kevin, it is paid as a lump sum to all who qualify and claim it |
Posted By: Kevin.S
Date Posted: 26 Mar 2020 at 3:38pm
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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Posted By: SaltyC
Date 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. |
Posted By: Sufishent
Date Posted: 26 Mar 2020 at 4:09pm
What form did you fill in? ------------- You can never have enough fishing tackle |
Posted By: Legacy
Date 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 |
Posted By: Sufishent
Date Posted: 26 Mar 2020 at 5:22pm
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Cheers ------------- You can never have enough fishing tackle |
Posted By: wayno
Date 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.... ------------- http://www.legasea.co.nz" rel="nofollow">  To be old and wise you must first be young and stupid. |
Posted By: Steps
Date Posted: 26 Mar 2020 at 6:20pm
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Information in this thread has been very helpful Thankyou all. |
Posted By: Keith C
Date Posted: 26 Mar 2020 at 7:37pm
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. |
Posted By: JK
Date Posted: 26 Mar 2020 at 7:41pm
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Posted By: terrafish
Date Posted: 26 Mar 2020 at 8:10pm
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All I can say is thank god they have given this subsidy. As a result of the drought here in the north, I have been unable to do over half my summer work and personnel funds were just about non existent. Being a sole trader in a time like this has its downfalls and bonuses. I had one client that I had been doing a bit of work for, and when I asked for payment she come up with a heap of **** excuse about paperwork not being in order despite having paid previous payments no problems at all. Last time I ever do work for a damn lawyer and good luck to them on the rest of their project figuring out where I got to!!. On the plus side with the subsidy that both the wife and myself managed to get, we should get thru this period and start again. Thank god she's a hairdresser. I almost feel sorry for her, for when the country starts back up, because that phone aint gunna stop ringing for weeks. ------------- Part time Devils Advocate, Fulltime procrastinator |
Posted By: jackel
Date Posted: 26 Mar 2020 at 11:15pm
| Hi guys, is the employer under any obligation to pay 80% of your normal wage (inclusive of the govt subsidy). I cant imagine surviving on the $585 or so less tax..... |
Posted By: pjc
Date Posted: 27 Mar 2020 at 6:01am
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Our company are paying us 50hrs per as per our contract,normal pay for 4 weeks as they didnt(not their fault)give us 2 weeks notice so cannot be forced to use holiday/sick pay. If it continues after 4 weeks we then use sick pay followed by holiday pay for a further 4 weeks,those who have no sick/holidays go on to the govt subsidy rate. God forbid it were to continue after 8 weeks then they might look at making everyone redundant then thats a risk as to when we return to normal how many would return. Incidentally received an email this morning.Quantas has extended it credit policy from must book by december 2020 to december 2021. Hmm what they triyng to say?? ------------- Sex at 58.Lucky I live at 56 |
Posted By: JK
Date Posted: 27 Mar 2020 at 8:25am
Common approaches I have seen so far are: - Up until lockdown (ie still working) paid at 80 to 100% of normal wage but part of this is funded by the $585 received by the employer - Post lockdown (ie not working) the same (assuming employer has good cash flows) - Post lockdown (ie not working)- just the $585/week and this approach to me is against the spirit of the wage scheme but your employer may not have the cash flow available to do this if business has totally dried up. There is also the ability for annual leave (as agreed between you and employer - cant be forced without 2 weeks notice) to be paid out to top up the $585 subsidy to get closer to your normal wage however if your employer has cash flow issues this probably isn't going to help them too much as they still need to pay out the $. It's tricky times for all involved
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Posted By: kinger
Date Posted: 27 Mar 2020 at 9:14am
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My boss offered me the opportunity to get one paid holiday day per week. I declined with the option to take up the opportunity if needed. We aren't buying petrol, not going out socialising, I believe we have enough coming in to get through the currently predicted lock down. He needs money to look after his family too.
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Posted By: jackel
Date Posted: 27 Mar 2020 at 7:56pm
| To employers on the forum, would you keep the same payment of 80% for all employees, or can employers pick and choose whom of their staff the pay 80% and who they pay just the $585 subsidy? |
Posted By: JK
Date Posted: 27 Mar 2020 at 8:29pm
Some puzzling guidance has come out of WINZ today which states that if the employees normal wage is below the subsidy amount you still pay them the full subsidy. We expected you would pay them normal wage and then probably have to repay the govt the excess. This means you can have situations where a part time employee normally does 4 hours work in a week and will get $350, where as another who usually does 15 hours will get the same. It’s absurd. Great for some employees I guess and a business is no worse or better off but not great use of government spending. Will be a few things like this due to the speed that this all needed to be rushed through. |
Posted By: jackel
Date Posted: 27 Mar 2020 at 9:00pm
| Jk what I was meaning was, does the employer need to offer the same deal to all employees? (everyone full time, everyone earning well over $585 for a full week). All at work are well over the $585income per week (full time) so if my employer 'tops up' others wages to meet the 80% does that need to be done for ALL employees. |
Posted By: Grunta
Date Posted: 27 Mar 2020 at 9:01pm
| Hey Jade - thanks for your advice on this - tricky times and lots of unknowns. FYI everyone JK is at one of NZ's leading finance and management consulting firms. As such he's not only a talented LBG fisho, and it can't be taken as more than his personal thoughts on here, he's very conversant with these issues so thanks heaps for your input JK! |
Posted By: wayno
Date Posted: 27 Mar 2020 at 10:02pm
The wording on the official document issued by Work and Income is: " you (employer) must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsided period" A mate called in for a beer on Thursday before lockdown and told me his employer met with all staff to let them know they would be paid the subsidy only. Pretty sure W & I will be fielding many calls about this type of thing ------------- http://www.legasea.co.nz" rel="nofollow"> To be old and wise you must first be young and stupid. |
Posted By: JK
Date Posted: 27 Mar 2020 at 10:16pm
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Yes where an employer has claimed the subsidy on behalf of their employees, every employee should be paid at the 80% of their wage (as a minimum), unless it’s below the $585, in which case they should get the $585 or $350 if part time ------------- LedgeNZ LBG |
Posted By: JK
Date Posted: 27 Mar 2020 at 10:21pm
Thanks Grant - yes any advice is strictly in my personal capacity. I don’t work with this stuff but can interpret it and have been working through it for one of our family businesses and to help a few others in need during these uncertain times. I’m sure more guidance will come out soon to provide some clarity ------------- LedgeNZ LBG |
Posted By: SaltyC
Date Posted: 27 Mar 2020 at 10:38pm
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This is a regulatory light system in order to deliver a fast response. The official wording is about employers making their "best endeavour" to pay 80%.obviously this is open to quite a lot of interpretation and may not need to be applied equally across all employees, however the employer would have to have a well defined set of criteria to distinguish between those it chooses to subsidise and those it doesn't. That may be simply that those it doesn't would be laid off completely without the availability of the subsidy and those it subsidises would be kept on as long as financially possible. The clear intent however is that employers will commit to paying all employees 80%. Robertson has been clear that the aim of the subsidy is to keep as many employees as possible connected to their employer and that where any subsidy is claimed it must be passed on in full to the employee. |
Posted By: pjc
Date Posted: 28 Mar 2020 at 7:01am
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https://thespinoff.co.nz/business/27-03-2020/what-youre-entitled-to-under-the-covid-19-wage-subsidy-scheme/?fbclid=IwAR3IfKgOl3u4Wx1x0j8nV9K2H8q11Jd2RWCMs5evO8xLaCu5OjmS7TtF7X0" rel="nofollow - https://thespinoff.co.nz/business/27-03-2020/what-youre-entitled-to-under-the-covid-19-wage-subsidy-scheme/?fbclid=IwAR3IfKgOl3u4Wx1x0j8nV9K2H8q11Jd2RWCMs5evO8xLaCu5OjmS7TtF7X0 https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/changing-an-employees-work-arrangements/#annual" rel="nofollow - https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/coronavirus-workplace/changing-an-employees-work-arrangements/#annual ------------- Sex at 58.Lucky I live at 56 |
Posted By: Big -Dave
Date Posted: 28 Mar 2020 at 8:36am
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My son was forced to resign....I an fuming about it. He could inly see the big payout, holiday pay etc, Fortunately he has text messages insisting on this. ------------- you can't fix an idiot with duct tape, but it does muffle them for a while... |
Posted By: Steps
Date Posted: 28 Mar 2020 at 9:15am
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Side note for relieving teachers.. this is being sorted as at yesterday afternoon. Basically ave wage over the last few weeks.. Till sorted between nova pay and ministry emergency payments here http://www.education.govt.nz/school/health-safety-and-wellbeing/student-and-staff-health/novel-coronavirus-2019-ncov/information-for-staffing-provisions/emergency-income-support" rel="nofollow - http://www.education.govt.nz/school/health-safety-and-wellbeing/student-and-staff-health/novel-coronavirus-2019-ncov/information-for-staffing-provisions/emergency-income-support |
Posted By: JK
Date Posted: 28 Mar 2020 at 5:21pm
Finally common sense prevails with a bit more guidance out today In short: If you are receiving the COVID-19 Wage Subsidy, you must: Try your hardest to pay staff at least 80% of their usual wages; If that isn’t possible, pay at least the rate of the subsidy that applies to that employee If the employee’s usual wages are lower than the rate of the subsidy, continue paying that amount for the duration of the subsidy. ------------- LedgeNZ LBG |
Posted By: jackel
Date Posted: 28 Mar 2020 at 9:41pm
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This was also interesting today. The money is paid out by the Ministry of Social Development in lump sums, meaning a full-time worker should get a lump sum of $7029.60 for a period of 12 weeks, the length of the scheme set by the Government. taken from..... https://www.msn.com/en-nz/news/national/finance-minister-clarifies-apparent-loophole-in-wage-subsidy-scheme-update/ar-BB11OLnJ?li=BBqdg4K&ocid=mailsignout" rel="nofollow - https://www.msn.com/en-nz/news/national/finance-minister-clarifies-apparent-loophole-in-wage-subsidy-scheme-update/ar-BB11OLnJ?li=BBqdg4K&ocid=mailsignout |
Posted By: JK
Date Posted: 28 Mar 2020 at 10:24pm
Well that’s a bit of a strange one as the employee would never get that amount even if it was paid as a lump sum as they will receive it next of paye and KiwiSaver etc. Haven’t seen any similar wording on official information sources so would guess it’s just a reporter’s para phrasing or poor interpretation ------------- LedgeNZ LBG |
Posted By: wayno
Date Posted: 29 Mar 2020 at 9:50am
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How much do you get? The wage subsidy is $585.80 a week for full-time workers (who worked 20 or more hours per week before COVID-19) and $350 a week for part-time workers (fewer than 20 hours). It is paid out in a lump sum covering the 12 weeks, meaning a $7,029.60 payment per full time worker. What are the conditions of getting it? The employer must make the best endeavour to pay staff a minimum of 80% of their previous wage. If this is not possible then they must pass through the entire government subsidy. Employers must also keep the worker employed for the full 12 weeks of the subsidy. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12320433" rel="nofollow - https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12320433 My understanding is that employers receive the full $7k per full-time employee which they then dole out at the $585/week (less paye & kiwisaver) + topping up to 80% "where they can" for duration of business interruption, up to the 12 weeks the scheme covers. What doesn't seem clear at this stage is what happens if we're all back to work in, say 6 weeks? Do employers get to keep the unpaid out subsidy or return to government? What happens if the current situation extends beyond 12 weeks? Will the government supply additional funds? Again... Many questions, few answers... ------------- http://www.legasea.co.nz" rel="nofollow"> To be old and wise you must first be young and stupid. |
Posted By: SaltyC
Date Posted: 29 Mar 2020 at 10:44am
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The wage subsidy scheme predates the lockdown so it it was implemented before people were shut out of work and therefore continues for the full 12 weeks should the lockdown be lifted before then. Robertson has said all options are still on the table at the end of the 12 week period.
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